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Gartmore opens absolute return to retail market

Gartmore has made its absolute return investment process available to retail investors with the creation of its European absolute return fund.

The fund aims for growth by investing in equities and equity related derivatives in Europe including the UK. It can invest both long and short, but as a Ucits fund, it is only able to take short positions using derivatives. Typically, there will be 50 to 100 long and short positions, which will reflect the long-term strategic and short-term tactical views of the managers, Roger Guy and Guillaume Rambourg.

Guy and Rambourg have managed the long-only Gartmore European selected opportunities fund since 1997 and the long and short AlphaGen capella fund since 1999. With the new fund, they will aim to take long positions on stocks that will rise above market expectations and short positions on companies they expect to deteriorate beyond expectations.

Stocks are selected after the managers analyse growth rates and the political, economic, social and technological factors that could affect industries . The impact of issues such as the threat of new entrants to the market and the power of suppliers and customers is also assessed.

Unlike traditional long only equity funds, absolute return funds such as Gartmore’s are not constrained by a benchmark. They should perform better than long-only equity funds when markets are falling due to the ability to use shorting techniques. However, outperformance is not guaranteed and returns are likely to be lower than long-only funds when markets are rising.

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