Geoff Wilson has lifted cash holdings in his three listed investment companies after a tough start to the year but found keeping much of his powder dry last year was no hindrance to performance.

WAM Capital, WAM Active and WAM Research held between 27.1 per cent and 41.5 per cent of assets in cash over 2015 but their investment portfolios all managed to significantly outperform the benchmark All Ordinaries Accumulation Index, which measures performance with dividends reinvested.

While the index returned 3.8 per cent in a volatile year, WAM Capital, the biggest of the funds, outperformed by 21.8 per cent, WAM Research by 26.9 per cent and WAM Active by 15.5 per cent.

Mr Wilson last month predicted the market would end 2016 about 5 per cent lower and is sticking with that tip despite a horror start that has seen the Australian market suffer its worst-ever start to a new year with the S&P/ASX 200 index down 7.4 per cent after eight straight days of losses.

The chairman of Wilson Asset Management said WAM Capital had lifted cash holdings from 34 per cent to about 38 per cent as it searched for opportunities among undervalued growth companies.

He said WAM continued to favour tourism stocks that would benefit from the low Australian dollar keeping tourists in the country, the growth of food exports to Asia and higher-yielding financial services that were attractive at times of record low interest rates.

Investment performance figures were buoyed by holdings in some of 2015’s best-performing stocks, including vitamin maker Blackmores, whose shares boomed on the back of a growing Chinese wellness market. WAM bought the shares at $47 and watched as they zoomed to $220.90.

WAM also held milk company a2, which was the subject of a bidding war and rose nearly fivefold, although the fund sold out of fellow dairy producer Bellamy’s at $1.70 before its shares flew to $15.48.

Other strong performers included hotel group Mantra and lease companies Eclipse and Smart Group. It sold Slater & Gordon at around $6.50 before an aggressive short-selling campaign and doubts over its earnings forecast following a billion-dollar UK acquisition saw the shares tumble to 69c.

Mr Wilson said that with around 90 stocks in WAM Capital it needed 10 to be strong performers to deliver outperformance for the portfolio.