To protect against unexpected swings in markets, Williams has snapped up a FTSE 100 put option with an index strike level of 5,800, which he bought for roughly £3.9m, or 1.6% of the trust’s £246m net assets.
“The portfolio remains well invested and well positioned to generate an attractive level of income and income growth and participate in any market appreciation,” investors were told, after the purchase of the put option was announced. “The advantage of holding a put within the context of a broad portfolio is that should unexpected events adversely impact on the level of equity markets generally, then the put tends to partially offset the market fall.”
According to Numis, Williams has successfully used index hedges in the past to protect against severe market swings, and in 2007 when he was running the Gartmore Growth Opportunities Fund Williams bought protection and sold it on at the peak of the crisis, helping generate substantial outperformance.
Elsewhere at Miton, it has emerged that the fund house plans to soft close Williams’ Multi-Cap Income Fund. The vehicle currently has just over £180m in assets, however following strong flows Miton is understood to be looking to limit its size.
