The new offering is a long/short absolute return fund invested in European equities. It is available through the firm’s in Luxembourg SICAV range.
The UCITS fund, is co-managed by London-based portfolio managers Paul Doyle and Fred Jeanmaire.
The first said it is being launched in response to growing client demand for a European equities long/short fund able to take advantage of volatility.
The fund’s benchmark is 3 month EURIBOR and the fund’s target performance is +6 to 8% per annum above the benchmark over a market cycle, or a three to five-year investment horizon.
The fund will follow the same investment process as the Threadneedle UK Absolute Alpha and the Threadneedle (Lux) American Absolute Alpha funds, which employ a ‘high-conviction, bottom-up stock selection’ process.
The fund managers aim to take long positions in what they believe are fundamentally strong and undervalued companies, while taking short positions in overvalued companies with weakening fundamentals.
Both long and short positions will be assessed using the ‘Porter’s Five Forces’ framework which has been used by Columbia Threadneedle’s European equities team for 20 years. The fund managers will typically take 40 to 80 long and short positions, with the ability to use derivatives.
Doyle said: “In an era of low interest rates and political uncertainty, as exemplified by the Brexit vote, we believe that a low volatility, absolute return strategy fits with our clients’ needs. Our portfolio is based on a unique and proven investment process driven by Porter’s Five Forces and the effort of over 20 investment professionals. We expect uncertainty to persist in Europe, with the upcoming referendum in Italy and elections in France and Germany, providing us with attractive investment opportunities on both the long and short side.”
Initially registered in Luxembourg, the fund is intended for distribution across other markets including the UK, Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Singapore, Spain, Switzerland, Finland, Norway and Sweden, pending regulatory approval in each country.
