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BlackRock duo make protection call on UK absolute alpha

BlackRock fund managers Nick Osborne and Mark Lyttleton have taken protection out on half of the net exposure of its £1.9bn UK absolute alpha fund.

Co-manager Nick Osborne says the unrest in North Africa and the Middle East could destabilise global growth.

He says: “Mark Lyttleton and I allocate capital to where we have conviction and there have been potentially detrimental events that are hard to analyse or price in, so protection is the sensible conclusion. The resolution of the problems in North Africa and the Middle East are likely to be benign but there will be some tail risk.”

Osborne says the team has bought Puts on the FTSE 100.

The £1.9bn BlackRock UK absolute alpha fund is one of the leading absolute return vehicles in the market. The fund is up by 1.7 per cent over one year and by 7.1 per cent over three years.

Outside of risk in North Africa and Middle East region, both managers believe the outlook is quite positive and they are finding more buy ideas than sells.

Hargreaves Lansdown senior analyst Meera Patel says: “I am not surprised they have done this, given the current market. It is these types of funds that can take advantage of the volatility in the markets and protect on the downside.”

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