Wealth Mgmt. Firm Preps Paired Trade ETF Strategy

May 8 2008 | 7:42am ET

San Francisco-based wealth management firm Main Management is prepping a paired-trading strategy that will invest in exchange-traded funds.

Co-founder and co-portfolio manager of the new fund Kim Arthur said the strategy, which is set to launch in the third quarter, aims to have a net-neutral exposure.

The strategy, which has been incubated since January, is shorting commodities such as gold but going long any of the countries that are producing the commodities, according to Arthur. He added that the strategy is also playing up to a dollar rebound trend, shorting global ETFs for telecoms and going long domestic U.S. plays for telecoms.

“We drill all the way down and get under the covers on sectors, so it’ll be sector pair trades, style pair trades and geographic pair trades,” he said. “The paired trade strategy relies on reversion-to-the-mean, too.”

And unlike existing ETF strategies in the market, Main Management’s paired trade strategy will charge a 1% management fee and a 10% incentive fee.

“Part of the idea with ETFs is that you don’t need a big research staff to be able to run your railroad, so you’re not out there doing individual work on securities, which are a lot more time consuming as opposed to research on sectors and asset classes,” he said.

The firm currently manages a long only equity sector rotation product, a global balanced product with option overlays, and an equity and fixed-income strategy. Its total assets under management are $250 million.

The new strategy will start trading with some $10 million in assets in the first year but it boasts a capacity of $100 million.

Arthur co-founded the firm in 2002 with Jim Concidine, Richard Fredricks and R. Stephen Doyle.


In Depth

AIMA: Smaller Firms Remain the Lifeblood of the Hedge Fund Industry

Jul 26 2017 | 5:55pm ET

It is a hedge fund industry truism that the largest managers receive the most attention...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Rastegar: PE Real Estate Gains Momentum as Uncertainty Rises

Jul 21 2017 | 6:04pm ET

The steady march of equity markets and fundamental shift in the direction of Fed...

 
Error

FINalternatives Trending

From the current issue of