Balancing the long short for success
Equities (Long Short)
Winner
Antipodes Global Fund
Finalists
Antares High Growth Shares Fund
Ausbil 130/30 Focus Fund
Favouring cheaper European domestics while shorting the relatively more expensive and popular global sectors such as low volatility bond proxies, and over-hyped disruptors such as cloud and social technology saw Antipodes succeed in its global fund.
The firm, which was also a finalist in the Overall Fund Manager of the Year category, said the success of the fund and the firm ultimately hinged on its investment team and process.
Antipodes deputy portfolio manager, Andrew Baud said: “Institutional imperatives around short-term performance often result in investment managers placing career or business risk ahead of investment risk, leading to portfolio construction outcomes that emphasise performance chasing or momentum in which risk-return trade-offs are compromised”.
The firm favoured cheap European domestics such as Telecom Italia, Deutsche Lufthansa, and financials such as ING Bank, and online services such as JD.com and Baidu. It went short on bond proxies such as developed market infrastructure and consumer staples.
Finalist, Antares believes that the pricing of individual stocks on the Australian share market was at times inefficient. Senior investment manager, Richard Dixon said that while the firm broadly followed a selectively contrarian strategy, stocks could sometimes trade away from their underlying valuation for a period of time.
“We believe it is possible to take advantage of those inefficiencies to deliver potentially superior investment returns,” Dixon said.
He added the firm identified stocks trading away from their underlying valuation by taking a longer term view than other investors, systematically conducting bottom-up research and ensuring the risk taken was commensurate with the expected return.
Ausbil’s 130/30 Focus Fund thrived on its strategy of expanding the opportunity set to generate alpha, where it would short those companies where analysts held a negative view.
Deputy head of equities, Gian Pandit, said: “The 130/30 can drive alpha through both longs and shorts in the portfolio and our style is very unconstrained. We do have both value and growth securities in the portfolio based on our core belief of earnings and earnings revisions driving share prices”.
The fund aimed to reap financial rewards from negative and positive stock views from a relatively narrow market, Pandit said.
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