Fund Hedge News London: Legal & General managers remain cautious on UK economy prospects and see opportunities for shorts in consumer-related stocks and longs in stock-picking.
Legal & General is a household name in England as the group has been providing financial services to the retail and corporate worlds for a long time - since 1836 in fact. And the group now runs a couple of hedge funds; the LGIM Japan Alpha Fund and the LGIM UK Smaller Companies Alpha Fund. The latter has consistently outperformed the FTSE Small Cap (ex IT) index since its July 2007 launch.
The LGIM UK Smaller Companies Alpha Fund, run from Legal & General Investment Management Ltd's offices in the City, is a long-short equity fund focusing largely on UK listed companies with a market capitalisation of under $2 billion. The fund uses a bottom up approach where stocks are selected on the basis of fundamental analysis, both qualitative and valuation. It manages $46m, has returned +7.23% YTD (to June), +13.99% since inception and the portfolio manager is Rod Oscroft.
Great stock picking and sensible sector bias
The returns have come from great stock picking and sensible sector bias with a low net exposure which has remained close to zero, said L&G manager Steve Leach, in an e-mail communication to Opalesque. In particular, the managers have made money by being short real estate. On the long side, stock picking has been excellent with the fund benefiting from bids in Nord Anglia and Expro in particular. Returns have been slightly enhanced by being long oil and aerospace for the period as well.
"The relative performance of L&G's long-only funds reinforces how good stock picking has been," Mr. Leach said.
Cautious about the prospects for the UK economy
In terms of outlook, the managers are currently cautious about the prospects for the UK economy and UK small companies.
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Source:
http://www.opalesque.com/AMB2008/46544UK_Special_A_good_season_for.html
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