U.K.-based F&C Asset Management is the latest asset management firm to enter the 130/30 space. The firm plans to launch its F&C UK Enhanced Alpha Fund in August, targeting a return of 4% over the FTSE All Share Index.
The offering will be structured as a SICAV, domiciled in Luxembourg, with a sterling share class for both institutional and retail investors. The fund will invest in U.K. stocks, employing a fundamental and bottom-up stock picking approach, according to fund documents.
The fund’s long portfolio will consist of 40 to 60 stocks and 10 to 15 stocks in its short book. Portfolio managers Makis Kaketsis and Luke Newman also manage F&C's UK Dynamic Fund and its Special Situations Fund respectively.
"As long-only fund managers, perhaps the greatest constraint to generating excess return is the inability to short, in other words our ability to express our negative view of a stock is very limited," Richard Wilson, head of U.K. equities at F&C Asset Management, said. "Our long only positions still need to be able to outperform the benchmark but by combining an element of netting off between the long and short positions, the risk return profile is also more favorable."
The new 130/30 charges management fees of 1% and a 20% incentive fee on any gains over the FTSE All Share index.
F&C managed some €151.4 billion under management (US$208.5 billion) as of March 31.