Global long/short funds outperform index

11-Sep-2013

By Caitlin Scarr

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Global long/short funds rated approved or above outperformed the MSCI World Index over the past 12 months, in a result that surprised researcher Zenith Investment Partners.

Sector funds rated by Zenith returned an average of 36.6 per cent for the 12 months to 30 June 2013, in comparison to a 32.8 per cent return for the index.

Only three of the 27 funds in Zenith’s “Global Long/Short Sector Review” released this week received a top rating of highly recommended: the Platinum International Fund, Platinum International Brands Fund and Platinum Asia Fund.

Global fund PM Capital Absolute Performance Fund was upgraded to a recommended rating following positive changes at the firm in the past year.

Zenith alternatives research manager James Tsinidis said the outperformance of the funds compared to the index was surprising.

“It is actually somewhat of a surprise that our global long/short funds have beaten the market over the past 12 months given the strong rally,” Tsinidis said.

“While most of the funds on the approved list are typically long biased, many of them will hold higher levels of cash and have some shorts on. This will generally hold back returns in an upswing.”

He said approved listed funds tended to perform well in their portfolio position in the longer term.

“[Individual fund net exposures] have changed over time and they generally seem to be very capable when it comes to removing or taking on more market risk,” he said.

He said part of the reason for the funds exceeding the index was because they used greater flexibility to execute their investment ideas.

Some funds moved into out-of-favour areas of the market, such as down the market capitalisation spectrum and unloved sectors, with higher cash levels or shorts in place to offset these positions.

 Other managers were able to increase gross leverage in the portfolios to maximise high-conviction trade ideas.

Other global funds recommended by Zenith Investment Partners were the K2 Select International Fund and Five Oceans Wholesale World Fund. 



Recommended regional funds in Asia were the K2 Asian Absolute Return Fund and Premium Asia Fund, and other recommended regional funds were the Platinum European Fund, Platinum Japan Fund and Premium China Fund.

Zenith’s recommended sector funds were the Pengana Asia Special Events Fund, Pengana Global Resources Fund, Platinum International Health Care Fund, Platinum International Technology Fund and Premium Asia Property Fund.

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