Absolute returns - the future

While many managers have had Ucits III powers for years, intermediaries and direct investors have only a handful of onshore funds to select from when looking for vehicles that combine traditional assets with more adventurous, modern tools. The promise of a wave of European houses launching 130/30 funds could be just the ticket to tempt private investors

The next big thing, according to advisers and managers, will be the introduction of 130/30 funds to the UK. Already gaining popularity in the US, they allow managers to widen the universe of stocks under consideration and are seen as a halfway house between the mysterious and volatile workings of hedge funds and traditional long only strategies. 130/30 funds allow managers to use leverage, or gearing, to buy more long only equities. This is offset by an equivalent amount of short positions, leaving the fund effectively back at 100% and the manager with potential performance gains from bot...