Financial News – The credit crisis has taken its toll on the performance of 130/30 funds—which have 130% exposure to long positions and 30% to shorts—but so far investors appear to be giving them the benefit of the doubt.
Most 130/30 funds available to UK investors enjoyed net inflows in the first three months of the year despite of negative returns over the period, according to analysis by Financial News.
A cross-section of UK funds offered by asset managers including JP Morgan, Resolution, Threadneedle and UBS disclosed that most of their UK 130/30 fund returns were negative in the first quarter, according to data provider Morningstar, and many underperformed the relevant equities benchmarks.
However, investors—including retail investors, who are notoriously wary of investing in funds reporting negative returns—still pushed assets into many of the vehicles.
JP Morgan Asset Management is ahead of the pack, with four 130/30 funds available in the UK and a fifth reportedly on the blocks. It distributes two European equities and two US equities funds.
Since the beginning of the year, its four funds have suffered negative returns, according to Morningstar, and one of its European funds has shrunk in size faster than their performance accounts for, suggesting net outflows.
