Thursday, 23 February 2017
Last updated 9 min ago
Jul 26 2007 | 8:15am ET
Asset manager Dalton, Greiner, Hartman, Maher & Co. is making its first foray into the 130/30 space with the launch of its DGHM 130/30 LP fund in October.
“There’s been a lot of demand and, I think, a lot of supply within the pension fund space for 130/30s,” said Donald Porter, analyst. “The idea here is that we’ve got an all-cap long-only product and we’re going to take that product and invest it 130%. We’re also going to take our shorts that we have in our hedge fund, Enhanced Value, and we’re going to short 30% of the 130/30. One of the value-adds that we offer is that we have real shorting experience so the returns we’re showing investors are actual returns.”
The firm’s hedge fund, which started trading in April 2002, has achieved annualized returns of 9.3% net with a 6% standard deviation, according to Porter. It is currently managing some $60 million in assets.
Porter added that another value-added proposition for investors is the fact that the firm uses fundamental analysis in its securities selection, which he doesn’t think is prevalent among other shops currently offering 130/30 strategies. In addition, the firm will also offer institutional investors who would rather invest in a 140/40 or a 120/20 strategy the ability to do so in separately managed account formats. “So we’re trying to be as customized as possible to meet the demands of potential prospects,” he said.
However, he stressed that this is not really a hedge product that will save investors in a down market. “What it’s designed to do is increase investors’ returns with a little bit more risk. We’re able to get about 100 basis points more in returns from our long-only product while increasing the standard deviation by about 10 basis points,” he said.
DGHM 130/30 LP charges a management fee of 1% and incentive fees of 20% above a Russell 3000 hurdle. Individual investors can invest with a $500,000 minimum investment requirement while separate account investors are charged a $5 million minimum. The product is collectively managed by the firm’s team of 10-sector focused analysts.
Dalton, Greiner is a subsidiary of Boston Private Financial Holdings and currently manages some $2 billion in hedge funds and long-only products.