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ARTICLE · 21 AUGUST 2008

Covered Short Selling By UCITS Funds – The Debate Continues

Dillon Eustace
Dillon Eustace
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Dillon Eustace

Dillon Eustace

Dillon Eustace is one of Ireland’s leading law firms focusing on asset management and investment...

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In light of the current difficult market climate, pressure is mounting upon fund managers and pension funds to deliver ever-more important outperformance to their clients.

IrelandFinance and Banking
Karen Jennings
Karen Jennings
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1. Introduction

In light of the current difficult market climate, pressure is mounting upon fund managers and pension funds to deliver ever-more important outperformance to their clients. As a result, the possibility of allowing UCITS funds to engage in short selling techniques is receiving more attention at local and European level. Karen Jennings of Dillon Eustace considers recent developments in relation to possible strategies available to UCITS funds.

2. Short Selling by UCITS Funds

Shorting is one of the most important strategic tools now available. Shorting provides added exposure to a given market, allowing the fund manager to take an overweight position (long) in securities they like, but also to go actively underweight (short) in those they do not. In selling a security they do not own, the manager anticipates that it will fall in value and can be bought back at a lower price. Whereas a

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