The new face of 130/30?
Apr 27th, 2008 | Filed under: 130/30Pensions & Investments reports that assets in US 130/30 strategies grew 22% over the past 2 quarters. While still an annualized growth rate of close to 50%, the newspaper points out that this is a slower growth rate than the 77% experienced in the previous 2 quarters.
While P&I describes this growth as “drastically slower” than last year, the numbers are still relatively small (53 managers), so it’s tough to draw any definite conclusions from these numbers. But we were were struck by what P&I said next: “…with most asset gains picked up by fundamental managers…”
While fundamental strategies are gaining, quants still continue to dominate 130/30-land. As we’ve suggested before, it’s difficult to disentangle the poor performance of quant strategies in general from the performance of 130/30 as an investment approach. A rise or fall in 130/30 assets says more about managers’ view of the potential returns from beta, their own skill-level, their clients’ demands and their own particular business model than it does about the merits of short extensions per se. As a half-way point between long-only and market neutral funds, short extensions are simply an more aggresive form of active management, not an exotic new approach to investing.
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