Columbia Threadneedle Investments has launched the Pan European Absolute Alpha fund, a long/short absolute return fund invested in European equities available through its Sicav fund range in Luxembourg.
The Ucits fund, co-managed by London-based portfolio managers Paul Doyle and Fred Jeanmaire, aims to generate a positive return irrespective of market conditions and is being launched in response to growing client demand for a European equities long/short fund able to take advantage of volatility.
The fund’s benchmark is 3 month Euribor and the fund’s target performance is +6 to 8% per annum above the benchmark over a market cycle (a three to five year investment horizon).
It will follow the same investment process as the Threadneedle UK Absolute Alpha and the Threadneedle (Lux) American Absolute Alpha funds, in which high-conviction, bottom-up stock selection is the dominant driver of returns.
Doyle and Jeanmaire, the fund managers, will typically take long positions in fundamentally strong and undervalued companies, while taking short positions in overvalued companies with weakening fundamentals. Both long and short positions will be assessed using the Porter’s Five Forces framework which has been successfully used by Columbia Threadneedle’s European equities team for 20 years.
The fund managers will typically take 40 to 80 long and short positions, with the ability to use derivatives.
“Given the extreme market moves in the past months, our clients are looking for ways to reduce the impact of volatility on their portfolios while generating consistent risk adjusted returns. Columbia Threadneedle has an unrivalled track record of outperformance in European equities. Our 26-strong European equities team manages over €40bn AUM across portfolios. 73% of our European funds outperformed over one year, 85% over 3 years and 95% over five years,” said Gary Collins, head of Wholesale Distribution for EMEA and Latin America at Columbia Threadneedle Investments.