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Shorting of equities should be allowed in UCITS, says consultant


Shorting of equity stocks should be allowed to reduce risks within UCITS hedge funds, according to a consultant.

Isabelle Tykoczinski, a consultant with Kinetic Partners, says that regulators should allow some shorting on a case by case basis especially for those managers with shorting experience. 

Isabelle Tykoczinski from Kinetic Partners

UCITS hedge fund managers use different methods to create portfolios in a fund. Some platforms hold assets directly; others use a swap to replicate the risk/return profile; and with CTAs there is also a hybrid method employed.

Tykoczinski explains: “Total return swaps and derivatives are being used a lot by UCITS-compliant funds that short. This is because UCITS rules do not allow investment managers to