Challenger Financial Services has said it plans to roll out a global equities long-short fund to Australian investors towards the end of this year or early 2008.
The news comes after a successful start to the year for Challenger, which has scored $1.2 billion worth of investment mandates from six investors for the quarter to June 2007.
The financial services group, which is 22 per cent owned by James Packer, is hoping to capitalise on growing sentiment among institutional investors to hedge their long-only strategies in anticipation of falling equity market returns.
Challenger seeded the fund in October and has been running it behind the scenes, Challenger head of distribution Matt Gaden said.
"We needed to test out our shorting capabilities," Gaden said.
Long-short funds attempt to produce absolute returns in all market conditions.
A popular form is the 130/30 fund. A 100 per cent long-only fund goes short - or sells stock it does not own - on 30 per cent of its exposure.
This gives it an extra 30 per cent of the portfolio to spend on long-only stocks, which effectively hedges the hedge.
Challenger joins Mellon Global Investments as the latest Sydney-based manager to tap into institutional demand for long-short equities funds.
Mellon has launched the Mellon Australian Equity Long-Short Trust, which is aimed at Australia's institutional market.
It has been seeded by Australian Wealth Management's asset management arm, United Funds Management.
Long-short funds have proved immensely popular among Australia's institutional investors, with foreign-domiciled managers, such as Acadian Asset Management and AQR Capital winning mandates.
Challenger's asset management division has assets under management of $5.3 billion.
