Strategy
What is a market neutral
strategy?
A market neutral strategy is an equity strategy that aims to provide consistent long-term capital appreciation with an attractive risk-adjusted rate of return in any market condition. It takes long positions in companies expected to outperform their peers, and short positions in companies expected to underperform. By investing both long and short, a market neutral strategy aims to neutralize its exposure to the broad equity market and achieve a ‘beta’ near zero.
Why invest in our market neutral strategy?
- Diversification. Adding a market neutral strategy that targets returns independent of directional movements in the equity and fixed income markets improves the overall diversification of a portfolio.
- Risk mitigation. A market neutral strategy is designed to ease equity market volatility and reduce the severe impact of portfolio declines by balancing long and short positions. It is also intended to complement long-biased portfolios, which are heavily exposed to equity markets.
How does our market neutral
strategy work?
A market neutral strategy takes a long position in the stock of a company expected to increase in value (stock A), and a short position in a stock expected to decline in value (stock B).
In a market neutral strategy, if an investor’s capital is invested in long positions totaling $100, the manager would also sell short $100 of securities to neutralize their broad market exposure.
Who is our market neutral strategy for?
Our market neutral strategy may be suitable for investors who:
- Want to lower their overall risk profile, while maintaining equity exposure.
- Seek a strategy with a low correlation to the overall equity market.
- Are not focused on beating the market, but would like to reduce potential losses that can be detrimental to reaching investment goals.
What market neutral 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.