You could lose your pension...

TRUSt_NO_1_2

EdInvestor wrote: »

The public are not allowed to invest in hedge funds.

Well I didn't know that !

Pension funds and other funds,in which the public have invested in,cannot invest in 'hedge' funds then ?

Also I assume that any fund not specifically desribed as a 'hedge' fund, cannot short stocks or carry out any transaction associated with the derivatives 'market' ?

Or should I edit my previous post to just 'fund' as opposed to 'hedge' fund.

EdInvestor

TRUSt_NO_1 wrote: »

Well I didn't know that !

Pension funds and other funds,in which the public have invested in,cannot invest in 'hedge' funds then ?

They can, but it would be unusual for them to hold more than 5% or 10% of their assets in such niche asset classes (private equity is another one).

Also I assume that any fund not specifically desribed as a 'hedge' fund, cannot short stocks or carry out any transaction associated with the derivatives 'market' ?

There's a new type of fund called a "130/30" fund in which the manager can be long and short in the proportions mentioned. That doesn't mean it's a hedge fund though.And any fund may have invested in derivatives to reduce risk: both Anthony Bolton at Fidelity Special Sits and Neil Woodford at Invesco High Income use derivatives regularly as reis reduction instruments.

The idea of "absolute return" (aka hedge) funds originally was to reduce, not increase risk. Ordinary funds are required to do what they say on the tin, so a UK Equity fund (say) must always be 90% invested in UK equities even if they are headed south in a big way.The fund manager cannot sell and switch into cash, for instance.You the investor must instead sell your holding and switch to cash, he can't do that for you.

The idea of hedge funds is that they didn't have such restrictions and could thus take evasive action to avoid trouble in market downturns.Much the same approach was adopted historically by With-profits funds, so we know it doesn't work on its own as a strategy. There needs to be a good fund manager in charge.

No doubt most hedge funds will be found wanting in this department, just like most ordinary funds underperform.

jamesd

EdInvestor, a hedge fund is currently one of the fastest growing consumer funds there is: BlackRock UK Absolute Alpha. It's also, so far, doing an excellent job of delivering reduced volatility.

Hedging by buying short ETFs is also readily available in SIPPs (but not ISAs, unless someone knows better?), including even some ultra-short funds that deliver twice the gain of any drop in the S&P500.

That Blackrock fund started out as an institutional fund and that's an area that's apparently growing.

You should also consider changing the 70/30 description you used to reflect those that are actually used, since 70/30 leaves only 40% invested and 100% is required. Something like 130/30 is more likely, with 130% long and 30% short for a net 100% exposure. The fund manager can go for long term investing in the companies that are expected to grow and short the ones in the same sector that are expected to do less well. If the whole sector drops the shorting reduces the loss and if they do as expected both sides of the investment can make a profit.

TRUSt_NO_1_2

TRUSt_NO_1 wrote: »

What are the total available funds of the FSCS.I doubt if they will have enough when a few big hedge funds go bust.

I suspect another government bail out will be necessary....................

.

http://www.ft.com/cms/s/0/ee21ddbc-f08b-11dc-ba7c-0000779fd2ac.html?nclick_check=1

EdInvestor

It's amazing really

Just as the hedge fund industry starts crashing all about us, guess what?

http://www.sii.org.uk/web5/infopool.nsf/HTML/74E479B73E1B7E1780257371002E8A29

March 14,2008

Retail investors will have greater access to hedge funds under new proposals from the Financial Services Authority. The FSA's latest consultation paper sets out recommendations which will allow UK consumers to invest in funds of hedge funds and other alternative vehicles.

From the people who gave you Equitable Life and Northern Rock.
Mug punters, or what?

Buyer beware!!!!

jamesd: re the 130/30 duly changed, a slip.

TRUSt_NO_1_2

EdInvestor wrote: »

The public are not allowed to invest in hedge funds

later quote by EdInvestor
It's amazing really

Just as the hedge fund industry starts crashing all about us, guess what?

http://www.sii.org.uk/web5/infopool.nsf/HTML/74E479B73E1B7E1780257371002E8A29



From the people who gave you Equitable Life and Northern Rock.
Mug punters, or what?

Buyer beware!!!!

jamesd: re the 130/30 duly changed, a slip.


.

I accept your apology Ed.
I would suggest to everybody

Go onto Youtube and type in Zeitgeist.
Then watch the movies on the Federal Reserve (and 9/11 to broaden your ‘horizons’)
You will then truly understand what the central banks (eg BOE) and governments are all about.

Or try this link whilst it is still there !


http://www.youtube.com/results?search_query=zeitgeist&search_type=

jamesd

EdInvestor, some hedge funds, anyway. Those with higher leverage (borrowing compared to capital) who are finding a 1929 situation of having difficulty or sometimes being unable to meet margin calls (to add more cash to back their loans, reducing leverage), while the 130/30 type would have 70% available to meet margin calls even if they somehow managed to use all of the 30% that was the long side of the hedge.

Consumers are seeing something similar in mortgages today as 125% and 100% mortgages are being withdrawn, forcing consumers to pay a higher deposit (and reduce leverage) to remortgage if they previously had one of those loans.

TRUSt_NO_1_2

TRUSt_NO_1 wrote: »

............
This made me look closer at the terms of my broker (TD Waterhouse) where my SIPP is traded (and ISAS),specifically relating to how well my assets (shareholdings) would be protected if they were to have any solvency problems as a result.......

TD Waterhouse recently took actions to reduce exposure to people who trade 'on margin'

On an ongoing basis, our credit and loan policies are reviewed to ensure they reflect current market conditions while protecting our clients. As part of this regular review process, and considering recent market volatility, maximum margin lending values have been reduced for select securities in the U.S. financial sector, effective immediately.
If you are holding any of these listed securities in a TD Waterhouse margin account, your loan value and available margin will be reduced until further notice.

looks like this broker left it too late...

http://www.jsmineset.com/cwsimages/Miscfiles/5967_afr.com_-_Irregularities_bring_down_Opes_Prime_-_The_Australi...pdf

CSVwizard

I was informed that this applies only once an annuity has been purchased and not before. Has anyone else tried getting clarification from FSCS?

Your information is incorrect.

http://www.fscs.org.uk/consumer/key_...sation_Limits/


Quote:
Max levels of compensation:

• Long-term insurance (e.g. pensions and life assurance): unlimited.
  
  100% of the first £2,000 plus 90% of the remainder of the claim.

dunstonh

I was informed that this applies only once an annuity has been purchased and not before. Has anyone else tried getting clarification from FSCS?

Its annuities, personal pensions and stakeholder pensions that have the 90% protection. SIPPs come under the investments category unless there are insured elements. However, its not really the SIPP you worry about. Its the investments themselves. i.e. hold £40k in cash in a SIPP and that comes under the deposits protection not the investments or insurance.