View more on these topics

Miton hits the ejector button

MitonOptimal says it has concerns about blackbox investment strategies and sold out of the JP Morgan Highbridge statistical market-neutral fund just before it fell by almost 7 per cent in less than a week.

Multi-manager MitonOptimal was holding the fund in its multi-asset Arcturus fund but says it sold out as it felt that the fund’s computer-driven model was not behaving as it expected.

The management of the JPM Highbridge fund is outsourced to Highbridge. It is a market-neutral fund which is designed to make money in rising or falling stockmarkets by buying stocks that its computer model identifies as cheap and selling short those that it identifies as expensive.

Miton believes this model was thrown off course when problems occurred in the credit markets as a result of defaults in the US sub-prime mortgage market, which also had an impact on equities.

According to MitonOptimal, the model could not cope with human emotion, which resulted in investors panic-selling quality stocks because they were most liquid while being unable to sell their unwanted stocks at the right price.

MitonOptimal says it has turned market conditions to its advantage by buying another hedge fund, Durham international.

This is a distressed debt fund that aims to make profits by shorting the bonds of companies that the hedge fund manager thinks will run into trouble.

MitonOptimal fund manager Tom McGrath says: “When there are problems in credit markets, Durham International should have a field day. It looks to make money if companies go bust, struggle or default on debt.

“Its manager was saying it could make 10 to12 per cent a year if there is not much of a problem and 30 to 40 per cent if there is a problem in credit markets.”

Highbridge declined to comment.


Protected rights set to get freedom

Self-investment for protected rights could be given the green light by October, removing restrictions that prevent investors directly self-investing in shares, bonds or commercial property.

Sub script

It looks as though we cannot entirely escape America’s sub-prime woes after all as the ripple effect works its way across the Atlantic. After months of sub-prime troubles in the US, the contagion is now affecting the UK, first, via jitters in the stockmarket and now through sub-prime lenders refusing to provide funding to new […]

S&P launches two new STARS indices

Standard & Poor’s Index Services has announced the launch of two new STARS indices that provide investors with exposure to the top stock picks of S&P’s equity research analysts in America and Europe.

ABI ready to clarify disability definition

The Association of British Insurers has received the go-ahead from the Office of Fair Trading to clarify its definition of total permanent disability.The ABI has been keen to ensure that the definition is more widely understood because more claims for TPD are declined than for any other single critical-illness condition, but required OFT approval to […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm