Brokers Note: BlackRock Hedge Selector One of the smallest & greatest?


#1

Valued at less than £40 million, the trust acts as a feeder fund for the large and difficult to access hedge fund. With a record of long-term outperfo
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#2

This performance is very good but I see that it’s underperformaed this year a little and I know BH Macro has done very badly recently too.

Don’t know much about All Blue.

Still, it’s performed well for such a long time I wonder why it is so small?


#3

With a track record like this why hasn’t Blackrock put more effort towards promoting it.

I’d never heard of it and I’ve been investing in investment trusts for years.


#4

I don’t understand what a hedge fund is and what it does so despite it having great performance I’d be to scared to invest in something like this.

Isn’t this the kind of thing that started the financial crisis?


#5

@SarahB Some hedge funds were involved in trading toxic debt but for what I can tell this is not that kind of animal atoll.

This Blackrock hedge fund is much simpler to understand than many of the others that operate so called Black Boxes of tricks. All they do is take a vie on if a share is gonna rocket or crash. If they think its going up they’ll buy it, and if they think its gonna bomb they’ll short it.

This trust is new to me but for what it’s worth it looks like it’s pretty bloody good.


#6

@SarahB The term hedge fund covers a lot of different things these days. Originally however it was something closer to what this trust does.

It’s a straightforward method of investing and they have a long record of doing it well.

Like others have said here I’d never heard of these fund managers of this investment trust, but it looks much better option to me than BH Macro which is falling on its arse recently or AllBlue.


#7

Maybe Blackrock just haven’t bothered to get their cheque book out to market this. They probably make too much from the hedge fund itself that they don’t need to.

Come on Blackrock, don’t be so tight!


#8

That red line in the first chart going up made my tummy tingle.

I’m not sure if everyone has read this properly though coz although the hedge fund has been around for 9 years the investment trust is kinda newish.

It’s still small nonetheless but maybe those Blackrock bods just need a bit more time to flash the cash in the marketing department.


#9

Haha, made your tummy tingle @CutyGirl, I have the same effect on girls :wink:

I’m not overly keen on hedge funds if I can’t explain what they do. This is a lot more straight forward, and the performance record is pretty stellar.


#10

Thank you so much for revealing what appears to be a GREAT opportunity which I have never seen recommended elsewhere. However, please can you explain how:

"The portfolio generally holds 150-200 positions, split broadly 50:50 between long and short names. Long positions are generally <3% of NAV, while short positions are generally <1% of NAV.

I don’t see how this can be the case. Where is the remaining 96% placed if it is neither long nor short?


#11

It appears that nobody has responded to my question above. It says in the above article that

“The portfolio generally holds 150-200 positions, split broadly 50:50 between long and short names. Long positions are generally <3% of NAV, while short positions are generally <1% of NAV.”

What I now consider this to actually mean is:

“The portfolio generally holds 150-200 positions, split broadly 50:50 between long and short names. EACH INDIVIDUAL LONG POSITION is generally <3% of NAV, while EACH INDIVIDUAL SHORT POSITION is generally <1% of NAV.”

Now that I have figured that out, I will investigate further to see whether or not I should invest in it. Has anyone invested in this or are they going to?

Paul

 


#12

Sorry, I agree that that is not very clear at all @warrenstar.

What is meant by <3% of NAV and <1% is no position will be more than 3 or 1 percent respectively of the total portfolio.

 

 


#13

I’d never come across this fund before I saw your comment @warrantstar but it looks really interesting. I can only say I’m interested in finding out more.

How about taking another look at this Which Investment Trust guys?

 


#14

It’s all very well quoting past performance figures going back to 2004, but retail investors couldn’t access the hedge fund until the launch if the IT in September 2009. Since that time both the NAV and share price have underperformed against the FTSE All Share on a total return basis. Although neither set of performances will tell us how it will perform in the future…

 

Because this trust does rely just on equities as its assets (even if it’s, er, negative equity… :slight_smile: ), it might not offer as great a degree of portfolio diversification as some of the other hedgies. Perhaps it’s better used as a replacement within an equity allocation rather than in addition to an equity allocation.

 


#15

A PR newswire release of 05/09/2014 for the investment trust reads as follows:

“Given the current market capitalisation of the Company and prevailing share
price discount, the Board of BlackRock Hedge Selector Ltd announce that they
will be undertaking a shareholder consultation in relation to the current
investment objective and policy of the Company’s existing share class.
The Company will make a further announcement in due course”

Given 1) The news release 2) The comment above by Ark Welder 3) General lack of information about the investment trust on Trustnet and elsewhere, I am no longer considering investing in this investment trust.

Paul.


#16

To me @warrentstar and @arkwelder This trust is a bit like Newton Real Return fund which also invests in long/short strategies only. The Newton fund has performed better of late than the BlackRock fund.

Nonetheless I think it is a shame if this trust winds up because for me personally, I can see the value and worth in owning a hedge fund but I need to be able understand what it does. I don’t understand GARS, the Standard Life fund, so i don’t on it.

I’ve been told by another investor I met that the BlackRock fund suffered staff departures. Maybe BlackRock should short out their staffing issues and then look to expand this.


#17

This is quite similar to Newton Real Return fund except that the Newton fund is more consistent.

There is a need for more funds like this but it needs to be consistent or else it needs to drop its fees if it under performs.

Blackrock are one of the biggest fund managers in the world so surely they’ll be able to sort this out. I hope they try rather than wind the investment trust up because it’s too small.