The new offering is an addition to BMO’s ‘True Styles’ series, which it says provides investors with access to strategies designed to “systematically capture the returns of academically proven investment styles.”
The fund aims to generate an annual gross return of 4.5% in excess of cash with a target volatility level of 6%. It combines five styles; value, momentum, low volatility, size and ‘GARP’ (Growth at a Reasonable Price).
The investments are all made within the large cap global developed markets universe as represented by MSCI World. BMO said this universe as well as the “strict liquidity limits” that are applied in portfolio construction ensure that investors have access to “a truly liquid alternative strategy.”
The SICAV has an ongoing charge of 2.15% per annum for the retail share class and 1.25% for the institutional share class.
The new fund has a pre-existing sister fund which was launched in July 2015. The F&C Global Equity Market Neutral Fund, which has a higher volatility target, has around £200m in assets.
Both funds target positive absolute returns through “an enhanced leveraged long/short market neutral strategy.”
BMO Global Asset Management has been running style-based strategies since 2007, managing approximately £2.2bn in both pooled and segregated portfolios on behalf of retail and institutional investors.
“Excess returns of portfolios can often be attributed to exposure to certain styles,” said fund manager Erik Rubingh, head of systematic equities. “Our True Styles approach is unique in the market place – we are not aware of a comparable product. True Styles is used to focus our portfolios, only targeting the desired styles, without interference from other factors. We use this methodology to filter our data, which has significantly improved the predictive power of our analysis, reducing the inter-style correlations and contributing significantly to reducing inefficiencies.”
