An interesting “tip” in our mailbox today in the aftermath of the “freezing” first of Standard Life and less than a day later, Aviva property funds, providing some intriguing perspectives on what UK asset managers are doing in light of the spike in post-Brexit confusion, the jump in volatility, and the drop in overall liquidity for all but a handful of instruments.
Had an interesting chat with a senior pm at brewin dolphin yesterday. Bd manages significant pool of uk pensions / charities / endowment funds. Their mandate is long only, real estate bonds shares.
Essentially they selling out all the real estate and piling up in iShares ftse etf. Minimum fees, simple transaction, they get 10% return in one week. Everyone going into Blackrock I Shares FTSE ETF. It pays a 4.45% yield, it is expected to pay even more yield (FTSE 100 companies pay dividend in $$, thus in GBP terms the yield is increasing. ) .. and it just goes up and up and up. The Safe heaven.
Until they will try to get out all at once from the ETF, and you guys know exactly well the type of crash this may bring.
They buy every dip of the ftse and have no interest whatsoever in hedges or anything . Ultimately they are paid to track the ftse and skim something at the very top
Similar at cheyne capital, U.K. Leading asset manager and property investors.
Volume shown below:
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The above may explain why the BOE is so concerned with preventing a wholesale selloff in UK stocks with not one but two precautionary appearances by Mark Carney in the past week: after all, if indeed everyone is on the same side of the boat, just the hint that central bank backstops are less than rock-solid may be the catalyst that launches the selling. Then again, markets always win in the end, as such a prudent reminder: “he, who panics first…”
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