Clime Investment Management currently has more than half of its assets invested in either bank bills or term deposits waiting for buying opportunities on the stockmarket.

With the official interest rate at 7.25per cent and several banks offering returns of 8 per cent in an uncertain economic and financial market environment, it is considered to be a virtually risk-free place to be.

Montgomery says: "When we made the decision to go to cash we simply could not find a lot of good quality businesses that were cheap. Companies we didn't think were the best in our portfolio we decided to sell, which increased our cash.

"We are now in a position where we can buy businesses that are cheaper than they were before or we can stay in cash. Eight per cent for six months with virtually no chance of capital loss is a pretty good return given the environment we are in.

"Until I can buy things at a 20 or 30 or 40 per cent discount to the market then it makes sense to be in cash."

Montgomery says he has no preset ideas about what percentage of his investments he will keep in cash or for how long.

"There are two alternatives: attractive investments or cash," he says. "It could all change tomorrow."