Zenith has completed its 2012 Domestic Long /Short Equities Review. The 16 funds were rated from a larger universe of 45 funds.
Zenith Long Short Index Daniel Liptak, Head of Alternatives, Zenith Investment Partners says that:
“As a result of the 2012 domestic long short review, Zenith constructed an index of approved long short domestic funds from June 2002 to May 2012. Net of fees the Zenith Domestic Long Short Approved Fund Index (“ZDLS APL Index”) achieved anannualised return of 13.1%, significantly outperforming the S&P/ASX 300 (Accum) Index at 6.4% per annum over the same period. This represents 7.1% alpha per annum after fees over the market index. This outperformance was achieved with slightly lower volatility and hence, superior risk adjusted returns.”
“While this data is of course historical and our list generally reflects managers that have strong long term track records, we nonetheless believe that this quantitative evidence strengthens our case for inclusion of quality long short equity funds to beconsidered in any equity allocation decision.”
Selected Funds
From an initial universe of 45 Domestic Long/Short Funds, Zenith has rated 6 funds “Highly Recommended” and 10 funds“Recommended”. The 16 Funds that were rated are shown below with their respective ratings and are segregated into the130/30 and Variable Long/Short categories.
130/30 Funds
A 130/30 long/short approach enables fund managers to short sell a range of securities and use the proceeds and the initial investment amount to purchase stocks. At a portfolio level the long/short positions result in a net market exposure of 100% (130%long – 30% short).
This more flexible approach allows the Manager to build a higher conviction portfolio. However, the approach does increase the gross leverage (short plus long exposure) of the portfolio, which may amplify losses should the Manager not be able to deliver added value from both its long and short components.
- Regal Long Short Australian Equity Fund – Highly Recommended
- BlackRock Australian Equities Opportunities Fund – Highly Recommended
- BlackRock Equitised Long Short Fund – Highly Recommended
- Perpetual Wholesale Share-Plus Long-Short Fund – Highly Recommended
- Grant Samuel Tribeca Alpha Plus Fund – Recommended
- Ausbil Investment Trust – Active Extension Fund – Retail – Recommended
- Arnhem Australian Long Short Equitised Fund – Recommended
Variable Long/Short Funds
A variable long/short approach enables fund managers to alter their net market exposure by building up cash positions or short selling stocks/index futures to protect their portfolios in poor environments. Many of the funds listed below are able to move their net equity exposure between 0% and 100% and are therefore flexible in terms of the market risk their portfolios are exposed to.
- Bennelong Kardinia Absolute Return Fund – Highly Recommended
- Mathews Velocity Fund – Highly Recommended
- K2 Australian Absolute Return Fund – Recommended
- Evergreen Australian Equities Return Fund – Recommended
- WaveStone Australian Equity Long/Short Fund – Recommended
- Antares High Growth Shares Fund – Recommended
- 90 West Global Basic Materials Fund – Recommended
- 100 Leaders Active Equity Fund – Recommended
- PM Capital Australian Opportunities Fund – Recommended
18 July 2012