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Rating:Accessor to Add a 120/20 Strategy to its Portfolio Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, September 18, 2007

Accessor to Add a 120/20 Strategy to its Portfolio

Reported by Erin Kello

Accessor Capital Management has tweaked the investment mandate of its small to mid-cap fund to include a 120/20 strategy, which will be available starting October 1. The fund will continue to be sub-advised by State Street Global Advisors under the new strategy, but the expense ratio will rise by roughly 10 bps to 136 total when the strategy take effect.

At a press conference this morning in New York City, Accessor CEO and Founder Tony Whatley told reporters that "this is the first small to mid cap fund to utilize the 120/20 strategy."

Ric Thomas, the portfolio manager for the fund at SSgA, sees the new use of "leverage" in mutual funds as the natural evolution of the fund business as it moves away from long only positions as a constant. He explained that the new strategy will allow the portfolio team to "take advantage of negative positions."

An interesting side effect of the use of leverage in funds is the need for a prime broker. Dan Yeung, senior investment officer with Accessor told the MFWire that Accessor has decided to go with Goldman Sachs' prime brokerage services after considering three other candidates for the job.

The use of hedge-like strategies in mutual funds has been building in the fund industry as managers see the outsized returns coming back from hedge funds. Accessor's goal is to give individual investors access to these sort of institutional strategies, Yeung said.

One potential snag may be getting the interest of those potential investors. With terms like, alpha, beta, and gamma being thrown out, investors may think their advisors are speaking Greek to them, making it difficult to get them to put their hard earned money in a vehicle they can't understand.  

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