Dalton Strategic Partnership has soft-launched a leveraged version of its flagship European equity long/short fund to achieve increased market exposure.,
The London-based boutique formally launched the fund at the end of 2013 to little fanfare.
It follows the same investment guidelines used by veteran investor Leonard Charlton on the Melchior Selected Trust – European Absolute Return fund.
However, the version, known as the Enhanced European Absolute Return fund, operates with 1.8 times the market exposure of the existing fund. Both funds are Luxembourg-domiciled.
Commenting on the launch, a spokesperson for Dalton Strategic Partnership, told Citywire Global: ‘Towards the end of last year we saw a fundamental change in equity market conditions, most notably that short stock selection was starting to work, and bad news was being reflected in share price behaviour.’
‘This was in contrast to much of the preceding two years when the market was awash with liquidity. The firm felt this was a good time for investors to gain exposure to a leveraged version of the core European long short strategy that Leonard had been managing since 2006.’
In the six months since launch, the strategy has accrued $80 million in assets, while the firm’s overall European equity long/short stable of funds has grown from $290 million to over $600 million.
Lead manager Charlton, who will oversee both funds, said the new enhanced version would suit investors seeking to make returns during the end of a bull market run.
‘This is when many companies are mispriced to the upside and markets are complacent. This is where we believe markets are today. Bull markets create bear markets – and bear markets are my thing,’ he said.
The Melchior Selected Trust European Absolute Return fund lost 2.07% over the three years to the end of June 2014. This is while the average manager in the Citywire Alternative Ucits Long/Short Equity sector returned 11.25.