NETHERLANDS - Robeco is launching a ‘short-extension' European equities fund which promises a "high return" by making extended use of derivatives.

The Robeco 130/30 European Equities fund will be run as an open-ended collective investment scheme (SICAV), under the UCITS III regime and be managed by Arlette van Ditshuizen.

Its decision to move into this space puts Robeco in the market ahead of rival asset management firm F&C, which announced almost two weeks ago, at the launch of its UK 130/30 fund, it would extend its 130/30 funds to "various asset classes" over time.

Jorg Sunderman of Robeco's product management, also told IPE he believes the company's experience in quantitative strategies "distinguishes [them] from the competition" and the fund has already attracted an early investment of €10m.

"Moreover, we have managed a single-strategy hedge fund, which also takes short positions, since 2005," he added.

According to Sunderman, the 130/30 fund is aiming for an information ratio of over 0.75 while the fund will have daily liquidity and be benchmarked to the MSCI Europe index.

There has been substantial interest among institutional investors towards the concept or 130/30 investments which give investors access to funds with ‘short' positions on traditional portfolio and shift their weighting of ‘long' investment positions to facilitate the use of stock shorting.

At the recent Fund Forum Conference in Monaco, asset managers speaking at a round table discussion said the ‘130/30' label is now considered a generic term rather than the exact explanation of their strategies as shorted investment can often move to as little as 5% - creating a 105/5 position - or climb to 150/50 positions to accommodate the potential gains to be had in the negative market.

"The advantage is that the short positions allow the fund to benefit from the expected underperformance of unattractive stocks, while the additional long positions provide a better diversification," said Robeco in a statement.

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