Salt reopens fund

[UPDATED] Periods of volatility have reminded investors that markets can go down as well as up, Salt Funds Management’s managing director says, and that’s part of the reason why it has reopened its Long Short Fund. ADDED Research IP comment

Monday, December 9th 2019, 8:18PM

The fund is currently $115 million and aims to hit returns of OCR plus 5% a year, pledging to provide “equity-like returns over long timeframes” with less volatility and no correlation to the New Zealand and Australian equity markets.

It has until now only been available in a limited way but managing director Matthew Goodson said the time seemed right to reopen it.

"Market-neutral long-short strategies have fallen somewhat out of favour given the backdrop of a bull market for the ages over the last few years. However, performance in the fund has generally been solid over the last six years and has been delivered with far less volatility than long-only equities and with zero correlation to them," he said.

“For those investors who view most asset classes as being very expensive, this lack of correlation has appeal in the context of a diversified portfolio and we have received steady inbound enquiry. This enquiry has been particularly marked when brief periods of market volatility have reminded investors that markets can go down as well as up."

He said the fund's current size was a "very manageable level" and so Salt was comfortable about reopening.

In its September quarterly update, the fund had returned 6.46% a year on average over the past five years after charges and tax, although it dropped 2.56% in the past year.

It was 30% in Australasian equities and 70% in cash and cash equivalents.

The market index over the same period was up 13.57% on average for five years and 15.29% over the past year.

The Long Short Fund has total charges of 1.7%.

Research IP director Darren Howlin says: "When reviewing a product that has unique features, such as the ability to short, understanding aspects such as funds under management and market conditions are considered relevant and important. While shorting can enhance performance, It also introduces additional risks, I.e. leverage in to the portfolio."

"Shorting can be readily employed In the Australian market, the New Zealand market does not have the depth and breadth of derivative instruments. Managing capital is a key aspect of the funds management process, assisting the fund manager to execute and meet the funds objectives."

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