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May 4, 2015

Monday Morning Memo: European Fund Buyers and Long Short Equities Funds

by Jake Moeller.

Lipper’s Jake Moeller examines how European fund buyers are gaining exposure to long/ short equities funds in April 2015.

Reuters/ Corbis

Reuters/ Corbis

The long/ short equity world is broken up into regional preferences (Global, Europe, UK, US etc) amongst European fund buyers and a large number of funds (138 in all) being used to gain long/ short equity exposure. Concentration is high amongst a small number of popular funds with a large tail of smaller boutiques and specific currency classes. Almost 50% of the entire market was composed of the top 25 options.

 

Table 1. Regional Long/ Short Equities Sector Performance (1-Year to April 30, 2015 in Euro)

Source: Lipper for Investment Management

Source: Lipper for Investment Management

By far the most popular fund by individual investors is Julius Baer EF Absolute Return Europe Eq-EUR C which tops the charts at 63 buyers however, the highest concentration by assets under management is with Schroder UK Absolute Target P2 Acc which has nearly 5% of the market in Europe.

Table 2. Long/ Short Equity Funds by Fund-of-Funds Manager Popularity (April 2015)

Source: Lipper, a Thomson Reuters company.

Source: Lipper

Interestingly the best performer over 1 year – MW Developed Europe TOPS F USD (1 year performance of 40.1% to April 30, 2015) has only been purchased by 8 buyers in Europe. The Julius Baer fund by comparison, returned 3.5% over the same time period. The fund in the sweet spot is R Parus I Euro Unhedged written by 12 buyers and returning 29.5% over 1 year.

Given the nature of the mechanics of long/ short equity, it should come as no surprise to see that only active funds are represented here.

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