The market will have to achieve operational and technological efficiency to sustain its rate of growth.
New analysis from Frost & Sullivan (financialservices.frost.com), 130/30s - Analysis of Active Extension or Short-enabled Investment Strategies, reveals that this market earned revenues of $54.40 billion in 2008 and estimates this to reach $169.83 billion in 2015.
If you are interested in a virtual brochure, which provides a brief synopsis of the report and a table of contents, then send an email to Christina Alfaro, Corporate Communications, at christina.alfaro[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.
"The 130/30 strategy is a hybrid of traditional and alternative investment techniques and is attracting interest from fund managers," explains Frost & Sullivan Research Analyst Kavitha Chakravarthy. "The traditional fund managers accept the opportunity to offer services that generate higher management fees, while successful hedge fund managers welcome the chance to extend their services into long-only fund management, complementing their alternative strategies."
Owing to the current economic uncertainties, institutional investors are scouting for avenues to generate additional returns (alpha). Investors seeking greater alpha opportunities from active management could possibly relax the long-only constraint.
"130/30 strategy uses financial leverage by shorting unattractive stocks and purchasing stocks that are expected to perform well," notes Chakravarthy. "This strategy provides greater flexibility to the portfolio manager to exploit information regarding underperforming stocks, resulting in better alpha generation and enabling the funds to perform better than the traditional long-only funds."
However, the shorting strategy cannot be easily implemented as fund managers face many challenges while transitioning to the 130/30 strategy. For instance, not many custodians have the infrastructure and technology support necessary for shorting. Their legacy systems have to be compatible with the current and future needs of the 130/30 strategy.
"Central dealing desks should be able to cater to the requirement of short selling and the use of derivatives for leverage and hedging purposes," observes Chakravarthy. "Risk, liquidity, and collateral have to be managed efficiently."
130/30s - Analysis of Active Extension or Short-enabled Investment Strategies is part of the Financial Benchmarking in the Asset Management Industry subscription, which also includes research services in the following markets: North American outcome-oriented funds: lifecycle funds - investment analysis, European green investments market, Indian asset management industry, and Japanese asset management industry. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
Frost & Sullivan's Business and Financial Services group serves clients around the world in all aspects of financial analysis, market research and monitoring, due diligence, idea generation, opportunity analysis, investment valuation, and other proprietary research.
About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 31 offices on six continents.
130/30s - Analysis of Active Extension or Short-enabled Investment Strategies / N4AE