Colonial First State launches market neutral fund
Colonial First State Global Asset Management (CFSGAM) has launched a wholesale global market neutral fund to the Australian market.
The fund has been operating for the past 15 months with $6 million in seed money, in which time it has produced returns of approximately 20 per cent, according to First State head of global equities Habib Subjally.
“Investors want something that is not exposed to the overall level of the equities market,” he said.
The market neutral fund would sit in the alternatives section of a portfolio since it is not correlated with equities, Subjally said.
The fund allows the CFSGAM global equities team to pick the ‘winners and losers’ in global markets within a structure that hedges out the rest of the equities market, he said. The fund can ‘pair’ two competing companies: shorting the ‘loser’ and taking a long position on the ‘winner’.
“Apple/Nokia is a classic example of the type of pairs that we have in that portfolio. Apple has a strong business model and is taking market share [whereas] Nokia is at a structural disadvantage. They’re trying to transition, but they can’t,” Subjally said.
Subjally has been in Australia speaking to potential investors for the past week. The fund was officially launched on Friday 24 August.
“The retail component is being launched this week. We’re talking to a couple of platforms … It’s not going to happen overnight,” he said.
A spokesperson for CFSGAM said an information memorandum on the fund was available to wholesale investors with a minimum investment of $500,000.
“We have received very positive feedback from a number of clients who are looking at global equity market neutral products as part of an allocation to alternatives,” the spokesperson said.
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