Accessor Capital Management is putting a new wrinkle in the increasingly popular 130/30 space. The long-only asset management firm next month is partnering with State Street Global Advisors to launch the Accessor Small to Mid Cap 120/20 Fund, with SSgA serving as subadvisor.
Accessor is looking to buck the trend of 130/30 strategies focusing on the large-cap space, according to Dan Yeung, a senior officer at Accessor Cap. “Most of the products that we’ve seen so far are focused on the large-cap space benchmarked to either the S&P 500 or Russell 1000, and we have not seen any 130/30 or 120/20 funds in the mid-cap space,” said Yeung.
“We believe that we’re going to be the first mutual fund implementing a 120/20 mid-cap strategy, which can limit potential risks. If you take on a 130/30 strategy, you’re taking on more tracking error and for this fund we’re targeting between 2% to 4% tracking error for the portfolio.”
Yeung, who oversees the investment team at Accessor Capital, will work closely with SSgA portfolio manager Ric Thomas to manage the $360 million fund. SSgA has been advising Accessor’s long-only portfolio since June 2001 but the fund itself goes back to 1992. SsgA’s quantitative approach employs a multi-factor pricing model encompassing growth, valuation and sentiment factors. Accessor’s new 120/20 strategy is benchmarked to the Dow Jones Wilshire 4500 Index.
Yueng said the firm is getting positive feedback about its new offering from its existing clients and prospects including regional banks, institutional consultants, wire houses and plan providers.
“Based on estimates from Morgan Stanley, there is about $88 billion invested in these kinds of long/short strategies, and Merrill Lynch recently predicted that the total assets in 130/30-type products will grow to about $1 trillion in five years,” he said.
Seattle-based Accessor Capital was founded in 1991 and currently manages some $3.3 billion in total assets.