Insight takes short Europe positions

Insight multi-managers Mike Pinggera and Steve Waddington have taken on short positions in the European market to allow them to retain their favourite European equity fund managers.

The managers have stripped out the beta from their European fund holdings, allowing them to remain invested in funds from Ignis and Barings that have outperformed the market.

European markets have corrected heavily over the last few weeks, as fears over the fiscal health of Greece have created a wave of negative sentiment.

Mr Pinggera said: ”These markets are very likely to be choppy going forward, but rather than sell European funds and remove and lose that alpha, what we have done is short the market and remove the beta.”

He said the Ignis Argonaut European Alpha fund, managed by Barry Norris, has boosted the Insight funds despite registering falls in recent weeks, thanks to the market shorts.

”We have made a profit of around 4 per cent from that trade,” Mr Pinggera said. ”This is a very, very good fund – a fund we like.”

The pair has made around 10 per cent with a similar trade on Nicholas Williams’ £377m Baring European Select fund.

”Most of the equity positions on the funds are now isolated,” the manager said. ”We are not running much directionality.”

He said markets were focusing on how governments were going to exit their unprecedented stimulus packages without damaging growth.

”I just can’t see that this concern is going to go away,” Mr Pinggera added. ”We are still prepared for more volatility.”

Elsewhere, the managers have benefited from a Japan call – they went long Japan and short the US, using futures, in early December last year.

Since then, Japan has rallied heavily, with the average Japanese fund reporting a 9 per cent rise over the last three months.

The Insight Diversified multi-manager funds target positive annual returns regardless of market movements, with the prospect of equity-like returns in the longer term.

Insight Diversified Target Return fund has reported a one-year gain of 11.7 per cent.