EUROPE - JPMorgan Asset Management(JPMAM), one of the pioneers of the 130/30 strategy in the US, has joined a host of new entrants to the UK market with the launch of four new funds for institutional investors.
JPMAM was one of the first movers into 130/30 in July 2004 with its US large cap 130/30 fund.
The Europe Select 130/30, Europe 130/30, US Select 130/30 and US 130/30 funds are Luxembourg-registered and available to institutional investors in the UK and mainland Europe.
A recent survey by IPE found European institutional assets in 130/30 and other allied strategies exceed e6bn, while global institutional assets top e18.9bn.
F&C, Resolution and UBS have all entered the UK market this year, joining established players like State Street, Henderson, BGI and AXA.
ABN Amro Asset Management is planning to develop 10 such strategies, including themed funds in utilities, financials and energy, while Robeco is working on what it describes as an "innovative" emerging markets 130/30 strategy.
Commenting on the move, Peter Ball, head of UK institutional business for JPMAM, said the firm's depth of experience, breadth of stock coverage worldwide and rigorous stock ranking systems and disciplined portfolio construction techniques gave the firm an edge over competitors.
"In order to perform in the 130/30 space you need to have an investment process that truly identifies those stocks that are likely to under-perform," he told IPE.
"The manager must also have experience of shorting. At JPMorgan each of the teams either already have a 130/30 fund - we've been running a mirror image fund for US institutional investors for three years now - or have experience running hedge funds."
The European funds will be managed against the MSCI Europe while the US funds will have the S&P 500 Index as their benchmark.
130/30 strategies enable the fund manager to short sell 30% of stocks they expect to underperform the market and use the proceeds from the short sales to finance an additional 30% exposure to high conviction stocks.
The result is a portfolio that is 130% long and 30% short, hence a net exposure to the equity market of 100%.