Pru Subsidiary Taps Internal Sub-Advisor For New Long/Short Fund
News summary by MFWire's editors
JennisonDryden is the latest fund firm to get in on the long/short action with a new fund. On Tuesday the proprietary Prudential fund family unveiled a new product, the Dryden US Equity Active Extension Fund, managed by fellow Pru subsidiary Quantitative Management Associates.
The fund has three QMA co-managers: vice president Devang Gambhirwala, managing director Ted Lockwood and chief investment officer Margaret Stumpp.
Company Press Release
JennisonDryden Launches Dryden US Equity Active Extension Fund
NEWARK, N.J. - (Business Wire) JennisonDryden Mutual Funds announced that it has recently launched the Dryden US Equity Active Extension Fund (Ticker: DUEAX), managed by Quantitative Management Associates to employ an innovative structure that combines long and short positions in a single portfolio. JennisonDryden is the proprietary mutual fund family of Prudential Financial Inc. (NYSE: PRU).
The fund is co-managed by Margaret Stumpp, QMA's chief investment officer; Ted Lockwood, managing director and portfolio manager; and Devang Gambhirwala, vice president and portfolio manager.
"We’re pleased to offer this innovative approach, which seeks to provide a better risk-adjusted return potential for clients' large cap core equity allocation. It also gives investors the opportunity to benefit from the expertise of one of the industry’s pioneers in quantitative investing," said Scott Benjamin, senior vice president and head of marketing and product development for JennisonDryden.
QMA employs its time-tested core equity strategy to create a portfolio of growth and value stocks. Then, through a flexible active extension strategy, the fund managers use the proceeds of short sales of stocks they deem unattractive to purchase additional long positions in more attractive stocks. QMA's quantitative model, which involves analyzing more than 3,000 U.S. stocks each day, is especially suitable for this type of investment. Since this approach identifies both attractive and unattractive stocks, adopting an active extension structure gives QMA more flexibility to fully exploit these insights.
"The ability to sell short enables the managers to potentially improve risk-adjusted returns in two ways," explained Benjamin. "The fund can profit from the potential underperformance of the stocks that were sold short. It can also benefit from the potential strong returns from the additional shares the managers purchased long from the short sale proceeds." The fund seeks to provide investors with returns that exceed the Russell 1000 Index, which is composed of large capitalization stocks and represents more than 90 percent of the U.S. market. Keep in mind that there is no assurance this objective will be achieved, and investors cannot invest directly in an index.
Quantitative Management Associates LLC (QMA) is a wholly owned subsidiary of Prudential Investment Management, Inc. QMA manages equity and balanced portfolios for institutional and retail clients. As of December 31, 2007, QMA managed approximately $62 billion in assets, including approximately $5 billion that QMA, as a balanced manager, allocated to investment vehicles advised by affiliated and unaffiliated managers, and approximately $7 billion that QMA allocated to investment vehicles advised by QMA.
JennisonDryden brings institutional asset management capabilities to retail investors and retirement plans in a wide range of mutual funds and separate accounts. JennisonDryden offers four asset managers—Jennison Associates, Quantitative Management Associates, Prudential Fixed Income and Prudential Real Estate Investors (PREI)—that are well known and respected by major corporations, pension plans, and other institutional investors throughout the world. Individuals investing in JennisonDryden products benefit from the same processes, research, risk management, and performance demanded by some of today’s largest and most sophisticated investors. JennisonDryden is a registered service mark of The Prudential Insurance Company of America. More information is available at www.jennisondryden.com. The JennisonDryden fund family is distributed by Prudential Investment Management Services, LLC, member, SIPC and a Prudential Financial company.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $648 billion of assets under management as of December 31, 2007, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. The company’s well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.prudential.com.
Consider the Fund's investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other information about the Fund. Contact your financial professional for a prospectus and read it carefully before investing.
In addition to the inherent risks of investing in the stock market, the Dryden US Equity Active Extension Fund is subject to additional risks associated with short selling, leverage and derivatives. Because the Fund borrows a security to establish a short position, there is a risk that the Fund will be unable to replace the borrowed security by purchasing it at a particular time or at an acceptable price, preventing the Fund from implementing its investment strategy. In addition, the Fund may be obligated to cover its short position at a higher price than the short price, resulting in a loss. Losses on short sales are potentially unlimited, because the Fund’s loss on a short sale arises from the increase in value of the security sold short.
The Fund may invest the proceeds received from selling securities short in additional securities, and may borrow money from banks for investment in long positions. Both strategies are forms of "leverage," which may exaggerate the effect of any increase or decrease in the value of the Fund’s holdings, and make any change in the Fund’s net asset value (NAV) greater than it would be without the use of leverage. This could result in increased volatility of investment returns.
The Fund may make investments in derivative instruments, including options, financial futures, swaps, option on swaps, structured securities and other derivative investments. Derivative instruments may involve financial risk, including the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement in the price of the derivative instrument, the risk of default by a counterparty, and the risk that the derivate instrument may not be liquid.
IFS-A145027 Ed. 03/08
Prudential Financial Inc.
Theresa Miller, 973-802-7455