neptune enters long/short space

In a departure from its traditional long-only stance, Neptune is to launch a Global Long/Short Sector fund on 1 November.

neptune enters long/short space


In a departure from its current long-only stable of funds, Neptune has chosen an unusual structure where it will short sectors as opposed to stocks.

This allows the fund house to maintain the sector research approach that it uses in the management of all its funds.

Neptune said its range of long-only equity funds had always reflected its in-house sector calls by being overweight sectors it expecetd to outperform and underweight or zero weight those it didn’t believe in.

The new Ucits compliant fund will allow the group to use its sector research to its full potential by shorting sectors where the in-house view is bearish and adding additional gearing on sectors it thinks will outperform.

Richard Green, deputy managing director at Neptune, said: "Our multi-award winning Global Equity Fund is nearing its 10th anniversary under the stewardship of Robin Geffen, having generated considerable outperformance over this period.

"This is not a change in direction for Neptune, but rather a natural development to leverage our existing intellectual capital to actively identify sectors we believe are due to under or over perform."

In the fund’s research model, each of the Global Industry Classification Standard Sectors will be represented by a basket of 20-50 large and liquid stocks that are correlated with global sector indices.

The exposure of the fund to each basket will be determined by the positions of the in-house global sector matrix and its long-only Global Equity fund sector weightings.

It will aim to have an average exposure of 15% to emerging markets in each sector to reflect the global GDP balance.
Ted Alexander, fund manager of the Neptune UK Equity fund will co-manage the new fund and has worked with together with Geffen on other products.

A test portfolio that has been run by Alexander since June 2010 has generated outperformance over its benchmark, with both sector selection and leverage shown to have contributed to this outperformance.



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