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Solvency Points on BBOZ

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Solvency Points on BBOZ

“Hi! James, from a solvency point I understand how to evaluate a corporation, well within reason, but how do u evaluate a hedge fund such as BBOZ from a solvency point, what I mean is the possibility of it going ' belly up' What is the maximum percentage u as an investor would be prepared to hedge in BBOZ?” - Keep up the good work, Tom A.

Answer

Morning Tom,

BetaShares is a major company with ~$15bn under management, its ETF’s make money courtesy of margins as opposed to directional “punts”, or in other words, their exposures are hedged using future contracts or whatever the underlying asset is that underpins the ETF. Furthermore, by definition as listed entities on the ASX they are heavily regulated – we are relaxed with their ETF’s.

History tells us that all manner of so-called safe companies can go broke and complacency by investors is dangerous, due to the nature of the BBOZ being leveraged up to 2.4x to the ASX200 at our most bearish we wouldn’t be allocating more than 12% into such a position.

MM is not buying the BBOZ yet.

MM is not buying the BBOZ yet
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BetaShares Australian Equities Strong Bear Hedge Fund (BBOZ)
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