OakBrook Unveils 130/30 Strategy

Jun 30 2006 | 6:39pm ET

OakBrook Investments has unveiled its new 130/30 vehicle, the Structured Large Core Plus strategy. The so-called 130/30 strategy allows managers to short a limited percentage of an equity portfolio's value while using the proceeds of short sales to reinvest in additional long positions.

"We will customize their portfolio to whatever desired level of exposure they would like," said Michael Lorenzen, director of marketing, "it doesn't have to be 130/30. It can be 120/20 or140/40."

The Chicago-based firm, which manages approximately $1 billion in a long-only portfolio and a market-neutral long/short fund, decided to create its latest offering in response to growing demand from institutional investors and consultants. "For us, it is a natural extension of the strategies we offer," said Lorenzen. "We have a 100% long strategy and a market-neutral strategy, which is 90% long and 90% short, so one can think of [the new offering] as a combined allocation to an enhanced index and a market neutral strategy."

Recently, a number of large firms, such as UBS and State Street Global Advisors, have begun marketing their 130/30 strategies.

While Lorenzen said these firms are natural competitors to OakBrook, he thinks that there is plenty of room in the marketplace for all of them.

"It is probably wise for people to consider multi-manager allocations to this kind of strategy," he said. "That has been practiced in the field of enhanced indexes…here you see firms hire more than one manager…o help reduce the tracking error."

The Structured Large Core Plus strategy will be run in separate accounts. The team managing the funds includes principals Neal Wright, Janna Sampson and Peter Jankovskis.


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