JPMorgan Asset Management has announced the launch of four 130/30 Funds aimed at institutional investors in Europe, the JPM US Select 130/30 Fund, JPM US 130/30 Fund, JPM Europe Select 130/30 Fund and JPM Europe 130/30 Fund.
JPMorgan says the funds offer managers the freedom to attain greater returns from their investment insights and processes by enhancing traditional long-only investing with an extra short exposure in unattractive stocks, offset by further long positions in the most attractive companies.
The long-short positions are set at a fixed portion of portfolio value, usually between 20 and 40 per cent range. This enables 130/30 managers to benefit from the stocks they believe will fall in value and take larger positions in the stocks they find most attractive in order to further gain from their expected appreciation.
'JPMAM has been at the forefront of the industry in developing and managing 130/30 funds, with the launch of one of the first 130/30 funds in the US in 2004,' says Peter Ball, head of UK institutional business for JPMorgan Asset Management.
'A depth of experience and breadth of stock coverage around the world, as well as our stock ranking systems and disciplined portfolio construction techniques, give JPMAM considerable competitive advantages when it comes to 130/30 investing.'
Ball says 130/30 strategies are appealing because greater capital is committed to insights. Shorting permits managers to commit more capital to stocks where they have high conviction, in both long and short positions. It also makes more efficient use of stock research by drawing on insights into unattractive stocks to maximise returns.
In addition, he says, 130/30 investing offers greater diversification by allowing managers to extend their long-only portfolio and exploit the entire breadth of research results. It also fits comfortably into an existing equity allocation; since these strategies are net 100 per cent long, they can be included in institutional investors' long-only equity portfolio allocation.