TORONTO (HedgeWorld.com)–”Selective” fundamental stock picking and measured allocations of long and short positions are the features of three new funds offered by a new Canadian hedge fund manager.
The funds offered by Selective Asset Management Inc. center on fundamentals of North American securities and economic trends that determine whether long or short positions should sway future performance.
The strategies–two single-strategy funds and a fund of funds–each rely on growth at a reasonable price analysis, commonly referred to as GARP. The funds are: Selective Asset Long Biased Equity Hedge Fund LP; Selective Asset Short Biased Equity Hedge Fund LP; and Selective Asset Long/Short Fund of Funds.
The Selective Asset Long Biased Equity Hedge Fund LP invests in companies with positive fundamentals. Positions in the fund are 95% net long in attractive economic conditions and are moved down to 50% in times of caution and move to 50% net short in times of deteriorating economic trends, according to the firm.
The Selective Asset Short Biased Equity Hedge Fund sticks to the strategy in its name and mainly shorts stocks. In economic downturns, the fund maintains a 95% net short position and reduces it to 50% in times of optimism. When longer-term optimism is apparent, the fund retains the flexibility to move to 50% net long.
The fund of funds evenly allocates assets to the both the long- and short-biased funds. On its web site, Selective Asset states the intention is not to create a market neutral portfolio through industry or sector weightings in the underlying funds. Most of the short positions in the fund will have an eye toward profit rather than the hedging of the long positions.
Robert McWhirter, portfolio manager of the funds and founder of Selective Asset Management, said in a statement that the firm expects an equity rally will continue possibly into the first quarter of 2005, but officials are still concerned about the level of equity valuations.
“We recommend the Selective Asset Short Biased Equity Hedge Fund LP or the Selective Asset Long/Short Fund of funds LP, which we believe would provide diversification against market volatility,” Mr. McWhirter said.
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