RT Journal Article
SR Electronic
T1 130/30 Equity Strategies
JF Special Issues
FD Institutional Investor Journals
SP 74
OP 81
VO 2008
IS 1
A1 Paul Quinsee
A1 Eric Remole
YR 2008
UL https://pm-research.com/content/2008/1/74.abstract
AB Broadly available only within the last three to four years, 130/30 strategies are quickly gaining favor among institutional investors in their quest for higher risk-adjusted returns. According to industry estimates, 130/30 assets under management already exceed $75 billion. Why the strong appeal? In brief, 130/30 strategies are designed to make traditional equity allocations work harder and smarter. This is done by loosening the long-only constraint on the portfolio manager, freeing managers to extract greater returns from their investment insights and processes. In the authors' view, these generally transparent, liquid, and risk-managed strategies are simply a more efficient way to manage large-cap equity assets. The authors anticipate that 130/30 strategies will become a significant and well-accepted approach to equity management, accounting for roughly 25% of active U.S. large-cap core equity allocations within the next three to five years. As a growing number of both quantitative and fundamental managers adapt their long-only strategies to incorporate shorting, the number of 130/30 strategies will continue to proliferate.