The 130/30 phenomenon has certainly arrived and judging by the media hype, investors should be clamouring to adopt the new strategy.
Threadneedle, UBS and JP Morgan are among the investment houses to launch or announce upcoming 130/30 ventures, but Chelsea Financial Services managing director Darius McDermott has warned advisers to be cautious when approaching this "new fad”. Popular in the United States, a 130/30 fund is structured with 100% of the value in a long only portfolio and 30% invested in a portfolio which shorts stocks. The short position is then reinvested in long positions, thus creating alpha. However, while McDermott is fairly positive on the opportunities for 130/30 funds, he believes a careful appro...
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