GLOBAL - Long-short funds, known as 130/30 funds, have grown in popularity over the past 12 months, despite wider market unease, a survey has shown.
Last year, 42% of investors had either already allocated to 130/30 funds or were planning to do so, although at the time only 16% had taken the plunge, while 26% planned allocations.
In terms of managers, the vast majority (70%) of fund provides said they offered 130/30 funds, or were going to introduce them over the course of the next year, compared to 47% last year.
Investors and manager attitudes to the funds have also changed, with more now believing the products have moved away from purely quant-based strategies and more fundamental-based approaches were appropriate.
The effect of the bans on short selling, which is central to the effectiveness of the strategy, was also noted. Some 63% of respondents said they were considering alternatives to traditional methods of short selling, with the most commonly cited investment routes under consideration being exchange traded funds (ETFs) and futures.
However, the results of the latest Global Pensions 100 Panel showed many investors were wary of allocating to new alternative investment products such as 130/30 funds, due to the complexity and risk involved (globalpensions.com; 5 November 2008).
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