N. Carolina Firm Rolls Out New Strategy

Sep 22 2006 | 12:00am ET

W. Wall & Company is rolling out a strategy that utilizes a combination of exchange traded funds and individual stocks to mimic a basket of traditional mutual funds, which the firm then trades tactically.

According to Warren Wall, founder and president of the eponymous fund management firm, the use of ETFs and stock baskets in the funds, Global Growth Programs (WGOII), allows the firm to have more flexibility than with traditional mutual funds because mutual funds limit the number of trades that can be made and often have penalties and lock-up periods, which he says handcuff the manager.

Tactical strategies used within traditional mutual funds are sometimes referred to as market timing strategies, but market timing is legal as long as the tactical manager is following the mutual fund’s exchange rules. However, Wall said that ETF’s and individual stock baskets now provide tactical managers with a great alternative.

“Although we still work with traditional mutual funds within our programs, we see our growth and capacity needs being met by these alternative fund vehicles,” he said.

Wall’s firm manages around $35 million in separately managed accounts, with the assets under management in the new program currently totaling over $12 million. Although the program is technically a new approach, Wall has been using essentially the same strategy for the past five years, but instead of trading ETFs and stock baskets, he was tactically managing traditional mutual funds. The WGOII program is up 12.06% year-to-date through August, and has produced annualized returns of 22.10% since inception in October of 2000.

The program was previously offered only to the firm’s private clients, but is now being marketed to high-net-worth individuals, institutions and funds of hedge funds.

“Now that we have a five-year track record and we were ranked by Money Manager Review as a top global equity manager on a risk-adjusted basis, we are ready to market our program to outside investors,” said Wall, who added that the fund does not employ leverage and uses cash instead of shorting to go market neutral.

Fees for the Global Growth Programs are 1% for management and 15% for performance, the minimum investment is $250,000 and there is no lockup period. DAL Investment Company is the sub-advisor, Millennium Trust Company serves as custodian, and MoniResearch is the firm’s auditor.


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