Man Investments has launched the Man Long Short Fund, a ’40 Act equity hedge fund-of-fund that will invest in up to 30 portfolios and offer monthly liquidity. With a minimum investment of $50,000, the fund will only be available to high-net-worth clients of top-tier broker-dealers.

The hedge funds that Man Long Short Fund will invest in will be located not just in the U.S. but Europe, Asia and emerging markets.

“With a few notable exceptions, such as the fall of 1998, the spring of 2003 and the first quarter of 2009, the last 15 years have been a poor period to invest in the stock market,” said Robin Lowe, head of equities at Man. “The fundamental justification for the long/short equity approach is not simply that tactical shifts in net exposure to equities can add value. The very existence of a short book is essential to help ensure a degree of downside protection in the event of an abrupt market reversal.”

While equities have the potential to deliver much stronger returns than bonds or cash over the long term, they do have higher volatility and risk, Man noted. Thus, the firm believes it is important to have exposure to equities but in a flexible manner, rather than in a traditional long-only approach.

“Average portfolios are still overexposed to equities,” said Art Holly, head of portfolio management for North America. “We are trying to produce a smoother ride by capturing 60% to 70% of the potential upside return of equities—but more importantly, only striving to participate in 30% to 40% of the downside. I believe it’s much easier to return to equity highs from a 10% drawdown than it is a 50% drawdown, where you need to make 100% return on your capital just to break even.”

To promote the fund, Man has created a microside dedicated to the fund:

-- This article first appeared on Money Management Executive.


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