Skandia Investment Management Limited (SIML) will launch its UK Strategic Best Ideas fund on September 19. The new fund will take ten best ideas each from ten top fund managers who will be able to both long and short stocks.
The ten managers will have the flexibility to adjust their exposure strategically according to their view of market conditions. The managers can invest in ten long ideas and up to five short ideas at any one time.
Skandia believes the fund has the opportunity to outperform traditional funds if the managers correctly anticipate an environment where more stocks will be falling, and increase their exposure to short ideas relative to longs. Over a full market cycle, this should give the fund lower volatility than traditional UK equity funds, the asset manager says.
It is also keen to differentiate the new fund from recent 130/30 launches. SIML says the fact managers have the flexibility to vary their market exposure (% in longs minus % in shorts) between 0-100%, and are not allowed to use gearing sets it apart.
James Millard, chief investment officer at SIML, says: “Recent stock market volatility has highlighted the importance of investment flexibility. In all market conditions, there are shares that are rising and falling, and UK Strategic Best Ideas gives world-class fund managers the opportunity to profit from both.
“We are confident that over the full market cycle, this fund will deliver strong returns relative to the UK market and traditional equity funds in a very different manner to existing UK equity funds with lower volatility, making it a great diversifier for investors.”
The launch of the UK Strategic Best Ideas fund builds on the Global Best Ideas and UK Best Ideas funds, which have combined assets under management of almost £680m (as at August 29 2007). Global Best Ideas is up 22.2% since launch and UK Best Ideas is up 10.8% since launch (source: Lipper Hindsight).
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