He says there are a number of opportunities to short at present with market volatility and macro uncertainty.
He highlights factors such as the proposed Australian mining tax, concerns over the Chinese economy tightening, government spending cuts and unemployment.
He says: “It is an extension of what I do with the fund being long on overseas earners, given slow growth concerns in the UK. This takes it a step further by allowing us to short stocks that, for example, are dependent on government spending.”
Steer says he is unlikely to short more than 10 per cent of the fund. He says the research with IFAs indicated they were keen for him to look at shorting, given his success of running the Gemini hedge fund at New Star.
He says: “The reason why people put money into that is because the alpha created on the short book was as good as the alpha on the long book, even when the market was rising. That was because of our focus on the accounts of companies. If you identify a company with bad accounts and short it, they tend to underperform dramatically when things go wrong.”