Dutch plans opt for long/short strategy
State Street Global Advisors (SSGA) has been selected to run one of the Netherlands’ first long/short US equity mandates for the Groningen-based Dfl14bn (e6.5bn) combined assets of the KPN telecommunications and TPG postal pension plans. The two $50m (e48m) accounts, one for each scheme, will be run by identifying under-valued US securities with superior growth potential.
Exposure is built using a long and a short portfolio: buying attractive stocks in the long portfolio and short-selling unattractive ones in the short. Because the sum of long and short investments is equal, market exposure is neutral.
Jan Willem Baan, chief investment officer for the plans, says SSGA already managed a US mid-cap strategy for KPN-TPG and that the fund felt comfortable with its stock selection capabilities. He added that KPN-TPG already has a lot of experience handling futures in the investment process and paid a lot of attention to SSGA’s risk control whilst carefully studying how to integrate enhanced long/short strategies into their world-wide equity portfolio.