S&P takes funds off ‘hold’

The dust is beginning to settle on the Australian Securities and Investments Commission’s ban on short selling, with major ratings house Standard & Poor’s (S&P) removing its ‘on hold’ assessment of a number of funds.

The ratings house said the ‘on hold’ rating had been removed because it had gained “a level of comfort that the affected funds were able to continue to execute their mandates”.

S&P fund services analyst Simon Scott said there were three funds from the alternative strategies tactical peer group that did not implement single-stock strategies and implemented their positions through the futures and forward markets.

“After consultation with these and a number of other participants, we are comfortable that the derivatives markets are functioning as expected and these managers can effectively implement their strategies and hedges,” he said.

“It has become evident that most managers have been actively reducing risk rather than transferring positions to other markets to try and gain the same exposure synthetically,” Scott said.

“We continue to be wary of those entering markets in which they do not usually participate in order to gain exposure, such as the global credit default swap market.”