The global asset management group has introduced an all-weather UCITS fund amid continued market volatilities.
Columbia Threadneedle Investments has launched a long/short absolute return fund investing in European equities.
The Threadneedle (Lux) Pan European Absolute Alpha fund, available through the group’s SICAV fund range in Luxembourg, will be co-managed by London-based portfolio managers Paul Doyle and Fred Jeanmaire. Investing in 40 to 80 long and short positions, with the ability to use derivatives, the fund managers will typically take long positions in fundamentally strong and undervalued companies, while taking short positions in overvalued companies with weakening fundamentals. They will assess positions using Porter’s Five Forces framework.
The fund will mirror the investment process of the Threadneedle UK Absolute Alpha and the Threadneedle (Lux) American Absolute Alpha funds, in which high-conviction, bottom-up stock selection is key. Its benchmark is 3 month EURIBOR and its target performance is +6 to 8 per cent per year above the benchmark over a market cycle, a three to five year investment horizon.
Initially available to investors in Luxembourg, the fund is intended for distribution in the UK, Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Singapore, Spain, Switzerland, Finland, Norway and Sweden, subject to regulatory approvals.
“In an era of low interest rates and political uncertainty, as exemplified by the Brexit vote, we believe that a low volatility, absolute return strategy fits with our clients’ needs. Our portfolio is based on a unique and proven investment process driven by Porter’s Five Forces and the effort of over 20 investment professionals,” said Doyle.
“We expect uncertainty to persist in Europe, with the upcoming referendum in Italy and elections in France and Germany, providing us with attractive investment opportunities on both the long and short side.”
As at 30 Jun 2016, Columbia Threadneedle managed €414 billion ($463 billion) of assets, of which over €40 billion was managed by its European equities team.