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Julian Gibbs

In today&#39s volatile stockmarkets, it is often easier to forecast which shares are likely to go down rather than those which are likely to go up. But how do investors take advantage of this? The answer is to invest in a long, short fund.

One which has been drawn to my attention by a top IFA is Elysian, managed by Paul Hopkins who has had over 20 years experience in this field. He was previously head of European portfolios and director of global equities at Bankers Trust and head of European equities and chief investment officer at IDS.

His comparatively new fund was established in December 1998. Its investment objective is to achieve a superior long-term return by investing in a limited number of well-researched equity securities traded predominantly in the US and European markets.

The fund&#39s investments focus on positions in stocks that exhibit stable growth and improving operating margins.

Conversely, it sells short positions in stocks that focus on declining industries and are experiencing competitive pressure and also stocks which are overvalued, with prices not accurately reflecting their underlying fundamentals.

At present about 25 per cent of the portfolio is invested in stocks which Hopkins believes will rise in value and 75 per cent in stocks which he believes will fall. The proof of the pudding, of course, is in the eating. In 1999, the fund returned 51.7 per cent followed by 19.5 per cent in 2000. Both figures are way ahead of nearly all global growth unit trusts.

I believe this type of fund should be a part of most bigger investors&#39 portfolios but investors should be careful to choose a fund manager who really understands this type of investment.

I believe Hopkins should certainly be one who all investment IFAs should meet.

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