London-based asset manager Threadneedle Investments has launched the first fund in its 130/30 strategy range, the Threadneedle American Extended Alpha Fund.
The new vehicle, which is being managed by U.S. equities fund manager Stephen Moore, is a traditional long-only portfolio of primarily North American equities enhanced with a short exposure to unattractive stocks set at around 30% of the value of the fund. This additional short position is offset by additional long positions in attractive companies, thereby raising the long exposure to around 130%. The overall net exposure to the stock market will therefore remain around 100%, though it will have more alpha than a traditional long-only portfolio while maintaining a similar amount of market risk.
Threadneedle’s new range of 130/ 30 strategies is an extension of the firm’s higher alpha, long-only capability which is characterised by a fundamental, stock picking approach. According to the firm, customers will be able to benefit from all Threadneedle investment insights, both positive and negative, as 130/30 funds enable managers with UCITS III derivative capabilities to implement more meaningful negative positions in unattractive stocks.
Threadneedle’s North American equity desk is based in London and manages a total of $US 9.9 billion in hedge funds and long-only assets.
“We’re proud to be one of the first European houses to run a fundamental 130/30 strategy fund,” said David Gasparro, head of distribution at Threadneedle. “It’s a perfect leverage of our established and thriving hedge fund business.”
Moore, manager of the new fund, said “Although we are confident the American market can make progress, choppy market conditions are likely to remain a feature and I expect this to present an excellent opportunity set for my long and short books.”
The new fund charges fees of 0.75% for management and 20% for performance.