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Blacksquare looks to cash to reduce risk

Blacksquare Capital has increased the cash weighting in its diversified absolute return fund from 5 per cent to 20 per cent and trimmed two of its holdings by half to reduce risk and preserve capital.

The IFSL Blacksquare diversified absolute return fund has had a difficult September, despite holdings in CF Odey UK absolute return and Ennismore European smaller companies producing a positive return of 1.05 per cent and limiting losses to 0.17 per cent respectively.

Blacksquare is frustrated with performance and has halved its holdings in two long/short equity funds, the Occam Asian focus fund and the Old Mutual UK dynamic equity fund, thereby boosting the portfolio’s cash weighting.

The IFSL Blacksquare multi-manager absolute return fund fared better in September than the diversified fund. Holdings in the CF Ruffer total return, Neuberger Berman diversified currency and Melchior European absolute return funds performed well with respective returns of 1.55 per cent, 1.35 per cent and 1.16 per cent.

Most of the other underlying managers limited losses to less than 1 per cent.

Blacksquare Capital chief executive Christopher Peel says: “The fund was down by 0.65 per cent and continues to preserve capital during periods of stress, which is one of the main criteria we use when balancing our portfolios.

“We remain frustrated with the performance of the diversified fund, which lost approximately 4 per cent. A number of the managers are still struggling with the present level of volatility and, as a result, we made some significant changes by increasing our cash position to reduce risk at a portfolio level and preserve capital.

We also reduced our holding in both the Occam Asian fund and the Old Mutual UK dynamic fund by approximately 50 per cent, which we effectively moved into our cash position.”

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