AXA Rosenberg Promotes 130/30

AXA Rosenberg Investment Management is discussing 130/30 strategies with institutional investors and its first client has committed to fund a global mandate in August. The firm is also touting its capacity to run European and U.S. versions of 130/30--whereby AXA Rosenberg would go 30% short and reinvest the proceeds into excess longs. "It's a market that is evolving as we speak," said Jennie Paterson, global head of sales. "If people come to us we can deliver." The firm has been promoting its approach at client conferences and external events.

Investors have three concerns when they consider 130/30 managers, Paterson said. First, they review the robustness of the process for selecting short positions. "For us that's not an issue because we already do that," she explained. AXA Rosenberg analyses 19,000 stocks every day and ranks the degree to which they are over or undervalued. Prospects also consider a manager's experience with short selling, something AXA Rosenberg has been doing since 1989, as well as risk control.

Performance will depend on whether the clients want to go 120/20, 130/30 or a different permutation, but "we're talking in the region of 4-6% alpha above the benchmark," Paterson said. Fees are slightly higher than long only. Most investors approach 130/30 as a way of "squeezing more alpha out of long only," she noted, although "some people have described it as putting a toe in the water for hedge funds."

As of March 31, the firm had $3 billion in assets under management from U.S. nonprofit investors, up from $1 billion three years ago. Arbel Eichbaum, director of marketing, relocated to New York last September to open an office there and become the firm's first specialist foundation and endowment marketer. Since then, AXA Rosenberg has added four nonprofit clients. The firm has $100 billion under management globally.