Beverly Chandler, Opalesque London:
Global long/short funds rated approved or above by Australia’s Zenith Investment Partners returned an average of 36.6% compared to the MSCI World index return of 32.8% for 12 months to 30 June 2013, while volatility levels were similar.
James Tsinidis, Research Manager – Alternatives at Zenith said "It is actually somewhat of a surprise that our global long/short funds have beaten the market over the past 12 months given the strong rally. While most of the funds on the approved list are typically long biased, many of them will hold higher levels of cash and have some shorts on. This will generally hold back returns in an upswing."
Tsinidis noted that part of the reason some of the funds exceeded the index was because they were using their greater mandate flexibility to execute their investment ideas to full affect. For example, his research showed that some of the funds moved into parts of the market that were out of favour (i.e. down the market capitalisation spectrum, unloved sectors, etc.) and were able to do this comfortably knowing that they had higher cash levels or some shorts in place to offset these positions. Other managers utilised their ability to increase gross leverage in the portfolios so as to maximise some of their high conviction trade ideas.
Tsinidis went on to say: "Over the longer term the Approved Listed funds have tended to do......................
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