Luxembourg-based Julius Baer Absolute Return Europe Equity Fund, has launched a sterling share class.
The fund, which is managed through the company’s flagship IM Distinction Diversified Real Return Fund, has generated a return of +9.9% since inception in September 2010 to 31 December 2011 and outperformed its benchmark.
Fund manager Andy Kastner pursues a market-neutral long-short pair-trading strategy. Kastner explains that using a multi-tier process, his team will select around 25 to 40 pairs, combining a stock that appears attractive (a long position) with an unattractive stock (the short position) from the same sector.
Both positions are always equally weighted, thus achieving a market-neutral and sector-neutral stance. This, says Kastner, allows the Fund to generate a positive return irrespective of the market developments, and even if both prices fall – provided the long positions outperform the corresponding short positions.
James de Bunsen, Portfolio Manager of Armstrong Investment Managers, has recently invested into the sterling share class due to its disciplined focus on achieving beta-adjusted market and sector neutrality. "There are too many funds in the long/short equity universe that simply provide investors with a low beta exposure to equities at a high cost, without adding any true diversification benefits. Lead portfolio manager Andy Kastner has extensive experience running market-neutral strategies and combines a strong research capability with a very robust risk management process. This approach allows the team to show conviction in their pair trades, thereby generating attractive returns, while controlling overall portfolio volatility,” says de Bunsen.
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