BMO Global Asset Management has launched a second equity market neutral fund, underlining managers’ and buyers’ interest in the strategy.
The Global Equity Market Neutral fund aims to generate an annual gross return of 4.5 per cent in excess of cash, and has a target volatility level of 6 per cent.
The Sicav, which will have an ongoing charge of 2.15 per cent at launch, will be managed by head of systematic equities Erik Rubingh. It will sit alongside the higher volatility F&C Global Equity Market Neutral fund, which has raised £214m since launch last July.
Unpredictable markets have pushed wholesale investors towards equity market neutral funds, previously most popular in the institutional space.
James Calder, research director at City Asset Management, said he used Kames UK Equity Absolute Return and the Old Mutual UK Specialist Equity funds for exceptionally low-risk clients or when markets are particularly stressed.
The Old Mutual fund has run as a Cayman-domiciled product since 2003; an Irish-domiciled version will launch this week.
“We have them on the bench to use in portfolios when we’re getting more nervous on the outlook. It’ll reduce long-only, buy long-short, and then – if you get very defensive – add one or two market neutral funds on top,” Mr Calder said.
In February, Kames Capital wrote to investors in three of its equity market neutral funds saying it would take measures to manage inflows. A spokesperson said last week the group was reviewing flows but had not yet soft-closed the products.
