Addition of long/short hedge signals venture into new asset classes
Royal Skandia has started the new year by expanding its offering both geographically and in terms of asset classes.
The company has added a long/short hedge fund to its self-select range and has also launched a managed fund specifically for Asian investors.
The Templeton Global Long Short fund, managed by Dale Winner, will have between 50 and 80 holdings and will be more long than short.
Winner said: "The fund intends to take long positions in good-quality companies with improving fundamentals that are undervalued. It takes short positions in poor quality companies with deteriorating fundamentals that are overvalued.
"The value discipline of the strategy will on average result in long holdings that have a lower valuation than short holdings. Although the fund may be net short a particular country or sector, typically it will have a net long bias."
Nic Burton, marketing manager of Royal Skandia, said the Templeton Global Long Short fund has been added to its self-select list because of demand from advisers.
"The fund has been on our radar for some time because it was requested. We could add the fund to our list because it has daily liquidity. The problem with most hedge funds is they have monthly or quarterly liquidity," he said.
Royal Skandia has more than 250 funds on its self-select list. They include the Momentum All Weather fund of hedge funds, which Burton said has consistently been in its top 10 most requested funds since being added over two years ago. According to Burton, Royal Skandia expects to add between 10 and 15 funds to the list this year. In January, Royal Skandia included the Threadneedle American Growth, Dollar Bond and Strategic Bond funds on its self-select list.
Royal Skandia has also launched a managed fund that is tailored for expatriate and local investors in Asia. It includes a greater allocation to hedge funds and Far East equity markets.
Its target asset allocation has a 21% weighting in US equities and 20% in hedge funds.
"Given the size of the weighting, we felt we needed to add a second fund of hedge funds to our existing allocation to UBS O'Connor. We chose HSBC Republic," Burton said.
Another 11.7% is allocated to Japanese equities, 11.3% to Pacific equities and 2% to emerging markets.
"We felt one managed fund was sufficient for the demand from Asia," said Burton. "However, if investors want to be able to choose from aggressive, balanced and cautious managed funds then we shall add them.
"The managed fund has been tailored for Asian investors because even expatriates want greater exposure to local markets when they live, in Hong Kong and the rest of the region."
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