King of the long/short
The Regal Australian Small Companies fund has returned 87.25%, year to 31 January, 2020, according to data from FE Analytics.
Its benchmark, the S&P/ASX Small Ordinaries Index returned 18.84% in the same time frame.
The fund, managed by Todd Guyot, had returned 33.07% annualised over the last three years.
The fund’s inception was 2 February, 2015, and it delivered a return of 329.31% from inception to 31 January, 2020.
“We are typically a 130/30 fund, meaning we are 130% invested on the long side and 30% on the short side, that allows us to add alpha on the long side and on the short side,” Guyot said.
Their strategy was done by buying a share portfolio with 100% of the capital, then borrowing shares worth 30% of the capital and selling them in the market, then buying an additional 30% in shares with the capital released from short selling.
The final exposure is 100% net (long minus short) of the original capital, and 160% gross (long plus short).
The small companies fund was designed to have a heavier weighting to long positions over short positions, which meant it would most likely display a general correlation to Australian small companies.
Performance of the Regal Australian Small Companies fund compared to its benchmark and the ACS Australia Small/Mid Cap sector (sector of funds with a similar benchmark), year to 31 January, 2020
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