The main driver behind creating the Australian Equity Long Short strategy, is the simple belief that the time is right for a strategy that contains significant market drawdown protection.
The stock market has performed extremely following the correction in early March 2020. However, we believe the market has reached an inflection point with an uncertain directional future.
The massive injections of cash to support capital markets has created a skewed inflation outlook, which is driving the potential tapering of stimulus and the prospect of interest rate hikes.
Geopolitical pressures will pull in other directions, and as history has shown, it will be the stock market that will bear the brunt.
It is our base case that long-term security returns revert back to economic reality. However, due to ongoing market inefficiencies, securities are regularly mispriced for short periods of time, as market participants engage in price discovery.
As such, trading opportunities present themselves regularly on a relative value basis.
Having such a strategy employed also gives the investor the ability to potentially harvest any loss the strategy may be running as a component of the overall strategy, to maximise tax efficiency.
Our identification of potential stocks involves looking at economic indicators, sentiment indicators and applying that across a market neutral strategy.
We then use our internal process of analysis, screening and ranking of our selected investment opportunities.
This is where our investment process and portfolio construction take over. The process produces baskets of stocks expected to outperform and underperform rather than specific stock picks.
We then apply our dedicated risk control and position management measures and execute them into the market.
Our process is naturally diversified, looking to select 15 long and 15 short selections for a total of 30 positions.
Christian has over 25 years' experience in the capital markets and funds management business. He was the Deputy Treasurer of one of the largest banks in the world and was the Director and Chief Investment Officer of Australia’s largest independent CTA (Commodities Trading Advisor) – managing a portfolio of managed futures and options.
Target strategy return is 20% with volatility of 15%.
2% per annum (charged monthly pro rata)
20% of outperformance over the high watermark
$50,000
$250,000