Mam’s Callow shorts markets ahead of dip

CF Midas Balanced Growth fund co-manager Simon Callow says he boosted positions which benefit from market falls ahead of last week’s sharp stockmarket dips.

Mr Callow, who runs the £194.9m fund with Mark Wright, said positions in FTSE 100 and S&P 500 exchange traded funds (ETFs) – which provide positive returns if the indices fall – now make up 7 per cent of the portfolio.

The manager said the increases were made before last week, when the UK index lost more than 2.7 per cent in the first two days of trading, while the US index lost roughly 1.8 per cent during the same period.

Mr Callow, who funded the increased hedging positions using his cash stockpiles, said events during the next couple of months could shake markets even more.

“We can only look a month ahead at a time at the moment as a Greek bond has to be repaid on August 20 and the troika is reportedly in Greece and unhappy about it not meeting fiscal targets, which means there is a danger Greece might not be able to repay the bond,” he said.

“Then the German constitutional court has to ratify the permanent bailout scheme (European Stability Mechanism) and the fiscal pact for budget discipline on September 12. Both of these events could cause the market to unravel or they could both be approved and then we’ll keep muddling on.”

The manager said his European exposure has been reduced recently from 6.5 per cent to 4 per cent, with the proceeds being put into fixed income and alternatives.

Mr Callow said he had increased exposure to Fidelity’s Luxembourg-domiciled £446.1m Global Inflation Linked Bond fund and the £35.8m Emerging Markets equivalent, which are both run by Andrew Weir.

The manager said he had used the Global fund’s Singapore dollar share class and the Emerging fund’s dollar share class in a bid to also make gains from the currency.