Aegon’s UK Equity Absolute Return launch will have a conservative investment strategy with a VaR of just 5%.
Managers David Griffiths and David Pringle say the £12m fund will be market-neutral, with a worst case drawdown over a month of one in 100 and a beta of zero.
The portfolio is invested into three specific themes including structural growth, best ideas and pair trades. It currently holds 10 pair trades, while short and long positions are evenly balanced at 35 each.
The fund will ultimately hold between 50 and 100 stocks and will not exceed 10% net long or short.
Griffiths and Pringle will be supported by the 12-strong UK equity team headed by Stephen Adams and will continue the investment strategy used across Aegon’s range of UK equity funds.
“One of our key themes will be turnarounds and stocks able to self-help, so we like Compass, Pendragon, Rentokil and Lloyds,” Griffiths says.
“These are typically the turnaround positions you would see in our long-only funds too and there is a strong overlap between what you will see here and those funds, particularly under the best ideas theme.”
Griffiths says he will seek to add value through mid-caps, which at 35%-40% of the fund outweigh the gross exposure to the FTSE 100.
It will also have more overseas exposure than to domestic stocks.
“What we are seeking to do is move the fund long to companies which we believe can outgrow their markets almost independently of what happens to the economy.That is probably the main focus of the fund,” Griffiths says.
