Ignis to expand short-selling capacities

By James Molony

LONDON (Reuters) - The asset management company formed by the merger of Resolution and Axial plans to expand its short-selling capabilities as the firm's CEO tips hedge fund-style investments to take their place in the mainstream.

Gavin Stewart, chief executive of Ignis Asset Management, said he believes negative publicity around shorting and opaque derivatives will be outweighed as investors look for ways to preserve capital and generate returns in falling markets.

He told Reuters: "We are very much of the view that alternative investment techniques will become increasingly mainstream over the next few years."

Ignis, which was formally launched on Monday, was created when Pearl Group bought Resolution Plc (RESGY.PK) and decided to combine their asset management businesses in a unit with 70 billion pounds in assets.

Stewart said Ignis will add to its range of "short-extension" products, such as 130/30 and long/short funds, to capitalise on future demand.

Funds in the 130/30 range can go as much as 30 percent short but always maintain a 100 percent net long position by boosting that part of its portfolio by a corresponding amount.

Techniques like short selling have traditionally been the preserve of the hedge fund industry, but were gaining traction among more conservative investors like pension funds before the credit crunch sparked a financial crisis last summer.

Since then many had expected complex investment strategies to lose favour - but Ignis is not alone in predicting some resilience. Aviva Investors told Reuters last month that it too plans to launch more hedge fund-style products.  Continued...