Now you can Short in an ISA
I've moaned for years that it's impossible to go short in an ISA, which
especially in a bear market has been really annoying. (ISAs by the way give
you the chance to tuck away £7,200 a year out of the grasp of the taxman's
greedy paws). That's meant I've been unable to "hedge" my ISAs against a
falling market - only being allowed to go long.
Pension plans (SIPPs) - no problem - you can use covered warrants or even
CFDs to short. And in a bear market you really need to be able to short!
However, I can moan no longer. Well, not quite as much, because at last it
is now possible to short within an ISA. That's because there is a new
Exchange Traded Fund (ETF) on the market which goes up when the FTSE 100
goes down. And because ETFs are allowed in an ISA, bingo!
It is now possible to gain from the FTSE 100 going down. And things like oil
too if you want.
The ETF I'm talking about was launched recently - it's called the DB FTSE
100 short - code is XUKS which you can look up on ADVFN. It's possible to
buy this within an ISA. If say the FTSE goes down 5%, then the price of this
ETF should RISE by 5%. Of course, if the FTSE rises, it will fall.
This is brilliant and as I write I'm intending to use this new facility.
There is only one problem I've found - and that's a sudden massive widening
of the buy price for a few minutes.
For example, last week it traded at 1123-1126 but often throughout the day
the 1126 buy price became 1200! If you were careless and bought "at best"
you would have paid over the odds. And on the day I'm writing this article
it traded at 1185-1225, quite a wide spread then settled at 1195-1198.
I guess this is because it's quite thinly traded and automated trades can
take out the proper price for a few minutes - there are roughly only about
12-15 trades a day.
So those of you looking to short the FTSE in ISAs be wary of the spread - it
needs to be traded when it is at its narrowest. Don't just buy - get the
There's also an ETF that mirrors the FTSE's UP moves too - the DB FTSE ETF-
XUKX. This goes up if the FTSE goes up and down if it goes down. So it means
you can trade the FTSE up and down inside an ISA if you want.
There are other intriguing ETFs too, which can be traded inside an ISA. One
interesting one if you think oil has peaked is ETFs Short Crude (SOIL),
which will go up if the crude price falls. A way perhaps, if you have oil
stocks in a long portfolio but feel short term the oil price might fall, of
I suspect there will be a growing number of short ETFs which will make going
short in an ISA and a SIPP easier and easier.
I'm extremely happy about this - and I hope as these are traded more often
the spread becomes less volatile.