130/30 funds: So much for $2 trillion by 2010…
Oct 7th, 2008 | Filed under: 130/30, Today's Post
The short-term future of 130/30 funds has been thrown into doubt as a result of the short selling ban over-staying its welcome. Consultancy the Tabb Group made headlines last year with its prediction that the market for 130/30 funds would reach $2 trillion by 2010. But according to a Financial News report on the weekend,
“…Larry Tabb, chief executive of Tabb, said: “I do not see how these funds can work if they can’t short. The whole model may be in jeopardy.”
The article goes on to say that Tabb has substantially revised its predictions for 130/30 sales. And he may well be right. Invesco, for one, has taken a pending Australian 130/30 fund off the barbie for now.
As we have reported before, many 130/30 funds performed poorly in August 2007 because most tend to be quant funds. That tendency to use quant models has apparently bitten 130/30 funds in the butt once again. As one expert told Financial News:
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