Hedge

A couple of years ago I bought as a hedge to my Sipp bond holdings the only "short" I could find, i.e. DB trackers U.K. gilt short ETF (SUKX). Since then, this has underperformed significantly when bonds tumbled last year, and is now back where I bought it, despite gilts quite a bit down from lofty 2012 Levels. Also, whilst DB states that entry/exit fees will be at most 3% either way, the bid/offer spread is at present 10.4%, whilst underlying short gilts are liquid. A hedsge is a hedge, so I am not minded to let go for now, but it just demonstrates (as if needed) that we get shafted with ETFs (and ETCs) with substantial hidden fees.

Comments

  • I agree with your comments; especially those in relation to hidden fees for the private investor. I purchased these in January 2013 at 109.162 and sold in February 2013 at 110.201 becoming quickly disillusioned at the lack of movement in relation to the movements in the market. I note tonight that the price is still 109.65!
    However, you may be interested to hear, after this I decided to short the S&P500 (S&P500 2x inverse) with disastrous consequences. With this you are fighting currency movements, and limited real time dealing; that is 3 -4.30pm. Not to mention the exaggerated spreads, hidden costs and of course the dreaded QE policy, rendring common sense useless.
    Should anyone be thinking of shorting markets, as a hedge to there portfolio, be very careful!
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