Henderson trust abandons short selling plan

The £245m Henderson Smaller Companies trust last week withdrew its proposals to introduce short selling.

As Fund Strategy reported on August 18, the trust’s board was planning to introduce shorting techniques, subject to shareholder and Financial Services Authority (FSA) approval.

Until a recent change in the UK Listing Authority (UKLA) rules, investment trusts were not allowed to use shorting techniques.

According to Henderson, its shareholders are not in favour of the trust shorting stocks at this time.

Neil Hermon, the fund manager, already has three and a half years’ experience of shorting small company stocks through co-managing a UK hedge fund at Henderson.

As reported in Fund Strategy (June 16), Throgmorton investment trust became the first UK small-cap trust to short-sell stocks.

Meanwhile, Gartmore told Fund Strategy that the launch of its European Absolute Return fund will go ahead as planned.

Richard Pursglove, the head of UK retail at Gartmore, says: “The current restrictions on shorting do not pose any problems for us implementing the strategy for the Gartmore European Absolute Return Fund and our plans are unchanged with the fund due to launch October 31.

“Client demand is strong for these type of strategies and our new fund has been very well received.”

Last week the FSA widened its ban on short selling to asset management groups, fearful that the banking contagion could spread across the financial services industry.

Aberdeen, Close Brothers, F&C, Investec, Old Mutual and Schroders were among the names added to the FSA’s list of protected firms.