View more on these topics

SVM utilises shorting in its UK opportunities fund

SVM Asset Management has gained the capability to make use of full Ucits III wider powers, which include the ability to short stocks and indices, within its UK opportunities fund. 

Ucits requirements demand that certain risk management processes are put in place before a fund can start utilising derivatives and SVM gained full capability for this two weeks ago.

The £52m unconstrained fund will now be able to short sectors, market caps and individual stocks according to the discretion of its manager Neil Veitch. 

SVM initially gained wider powers capability when it launched its UK absolute alpha fund in March and it has now rolled this out to the UK opportunities fund. 

Head of retail sales and marketing Mark Noble says the fund had a 7 per cent short position as at the end of October but it will be retaining a long bias so as to remain in the IMA all companies sector. 

Noble says there are no imminent plans for other funds to utilise the wider powers and it would be down to the individual managers to opt to use them. 

He says the decision to utilise shorts is about extending the range of market conditions in which the fund can deliver better performance. 

He says: “At the moment we see that there are some individual companies where it would be helpful to offset some risk.  Looking forward to next year, we believe the market will probably grind its way forward as opposed to standing on its tail and shooting up as it has done this year and that will mean that there will be opportunities to make money in stocks that are going to start falling back in value.”

The fund is up 45 per cent and ranked first in its sector over a three month period, according to Morningstar. 

Though it is a recent development, Noble says the fund has already benefited  from alpha created through its short positions. SVM has been running long/short funds since 1993 and Noble says shorting is part of the firm’s ethos. 

He says: “I am not sure that would exist for most other fund management groups and also you’ve got to look at the capability of the individual manager and whether it is their style.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment