Shortselling ban and Blackrock UK Absolute

luckylizard

wondered if anyone knew what the ban on short-selling means for funds like Blackrock UK Absolute Alpha that use lots of shorting?

will the fund manager Mark Lyttleton simply make the fund mirror his other UK funds (which are long only i think) during the ban?

if not, would it be better to switch out to another long only fund, at least until the ban is over?

Grantmk_2

There is only a ban on short selling listed Financial stocks. Short selling itself has not been banned.

purch

There are plenty of methods an Absolute Return Fund can utilise to 'short' the market or markets, especially if the trades are hedges against the overall position.

As the ban relates ponly to Financial Stock, they ought to be largely unaffected.

runciblespoon

http://www.blackrock.co.uk/IndividualInvestors/MarketView/MarketViews/UKCommentary/index.htm

irondog

Its difficult to say what Littleton is shorting. He only has to give his top 10 long holdings. I'm lead to believe that he is currently shorting 8 out of his top 10 longs, and as some of these are financial companies (I think....the portfolio changes quickly) then the short selling ban on financials might affect him a bit.

My concern over this fund is that IFAs and private investors are piling in, not really knowing what they are actually buying. I hear lots of cobblers about 'its a retail hedge fund'. Well, the point about the term 'hedge fund' is that there are about 8-10,000 funds in the hedge universe, so calling something a 'hedge fund' is like calling something an 'equity fund'. The term is so generic it becomes meaningless!

Looking at the top 10 holdings he has had a slant towards property and property companies (Hammerson, Dolphin Capital etc.) Do you really want to be buying property shares at the moment?

jamesd

irondog, yes, you want to be buying property companies at the moment.

You do that if you are buying one that looks relatively good and short selling one that looks relatively bad. Then you're not affected much by the general ups and downs of the property sector but can make money if you're right about the relative strength and weakness of the two companies.

Just doing the short selling part means that you won't be making money if the markets go up.