Strategy
What is an active extension equity strategy?
An active extension equity strategy aims to provide consistent long-term capital appreciation with an attractive risk-adjusted rate of return with similar volatility to traditional equity markets. It employs a long short equity strategy that targets net market exposure of 100% of fund assets, investing 130% of assets long, while selling 30% of assets short. Over time, this strategy aims to ‘extend’ gross equity exposure to 160%, thereby increasing the opportunity to generate alpha while maintaining a net market exposure similar to that of the traditional equity market.
Why invest in our active extension
equity strategy?
- Performance enhancement. Adding an active extension equity strategy increases the opportunity set to generate alpha because it aims to achieve 160% gross equity exposure, while maintaining market exposure similar to traditional equity markets.
- Diversification with momentum style. The strategy’s momentum style can serve as a great complement and offers diversification for portfolios that are heavily weighted in value, income and core-style equities.
How does our active extension equity
strategy work?
An active extension equity strategy is also commonly referred to as a 130/30 strategy because it involves investing 130% long and 30% short (relative to a long-only strategy, which invests 100% long). The additional 60% gross exposure in the strategy, relative to a traditional long-only strategy, extends the opportunity set to generate alpha, making it an ‘extension’ strategy. The key is that it is not introducing additional net exposure because the additional 30% long exposure is counterbalanced with 30% short exposure.
Who is our active extension equity strategy
suitable for?
Our active extension equity strategy may be suitable for investors who:
- Seek to increase their return potential, while maintaining volatility similar to that of traditional equity markets.
- Want to leverage additional hedging tools to enhance their long-biased or long-only equity portfolio.
- Are comfortable holding an investment over the course of a full market cycle, which includes both rising and falling markets.
What active extension investment products does
Picton Mahoney offer?
Alternative investment solutions are available as mutual funds, liquid alternative funds and hedge funds. Our suite of Fortified Mutual Funds, Fortified Alternative Funds and Authentic Hedge Funds give investors more choice and ease of access to alternative strategies, adding an alternative source of returns to fortify a portfolio. Our goal, for over 18 years, through different market cycles and investing environments, has been to improve the quality of returns by offering alternative investment solutions.
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This information has been provided as a general source of information, is subject to change without notification and should not be construed as investment advice. This material should not be relied upon for any investment decision and is not a recommendation, solicitation or offering of any security in any jurisdiction. The information contained in this material has been obtained from sources believed reliable, however, the accuracy and/or completeness of the information is not guaranteed by Picton Mahoney Asset Management (PMAM), nor does PMAM assume any responsibility or liability whatsoever. All investments involve risk and may lose value. This information is not intended to provide financial, investment, tax, legal or accounting advice specific to any person, and should not be relied upon in that regard. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.
There is no guarantee that a hedging strategy will be effective or achieve its intended effect. The use of derivatives or short selling carries several risks which may restrict a strategy in realizing its profits, limiting its losses, or, which cause a strategy to realize or magnify losses. There may be additional costs and expenses associated with the use of derivatives and short selling in a hedging strategy.
The offering of units of the Picton Mahoney Authentic Hedge® funds are made pursuant to an Offering Memorandum only to those investors in jurisdictions of Canada who meet certain eligibility or minimum purchase requirements. Prospective investors should consult with their investment advisor to determine suitability of investment. Please see the Fund’s Confidential Offering Memorandum for more information, including investment objectives and strategies, risk factors and investor eligibility.
Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Alternative mutual funds can only be purchased through a registered dealer and are available only in those jurisdictions where they may be lawfully offered for sale.