Australian retail investors are benefiting from the increasing availability of differentiated Global Long/Short equity strategies according to Justin Tay, Zenith’s lead analyst on the International Shares – Long/Short sector.
Zenith Investment Partners has just released its International Shares – Long/Short Sector Review, and commenting on the review, Tay said: “We have observed the launch of a number of new and differentiated investment strategies over the last couple of years, providing investors with greater choice for portfolio construction. Historically, the Global Long/Short space has been relatively limited with regards to the breadth of investment options available, so this is a positive. We are finding there are now strategies that fill previously vacant segments of the risk spectrum.”
Tay noted: “For instance, the relatively recent introduction of Managed Risk strategies. These strategies are designed to allow investors to gain an exposure to equity markets whilst limiting the associated performance drawdowns. Zenith now has two Global Managed Risk strategies on our APL. 18 months ago there weren’t any.”
Tay highlighted: “We view Managed Risk strategies as an appealing option for those investors who are transitioning to retirement for example. This is the time when investors are most exposed to sequencing risk and cannot afford a material loss of invested capital.”
Tay added: “In a broad sense, Zenith believes Global Long/Short funds primarily serve two distinct roles: to generate stable absolute returns whilst preserving capital and to generate outsized returns above equity markets. Intuitively, these two roles sit on opposite sides of the risk spectrum.”
In summarising the results of the review, which covers the 12 months ending August 2016, Tay noted the strong risk adjusted outcomes for Global Long/Short managers. “Pleasingly, the Global Long/Short funds on Zenith’s Approved Products List have generated attractive risk adjusted returns regardless of where they sit on the risk spectrum.”
Summary of the Zenith 2016 International Shares – Long/Short Sector Review:
From an initial universe of 28 products:
• 1 was rated “Highly Recommended”
• 12 were rated “Recommended”
• 5 were rated “Approved”
• 1 was rated “Redeem
• 9 were “Not Rated”
