The Ellerston Australian Market Neutral Fund (ECL0013AU) is an absolute-return strategy that aims to provide investors with a return profile that has a low correlation with more traditional asset classes.
The fund is managed by Ellerston Capital, which has the philosophy that the Australian sharemarket is inefficient at times and that this inefficiency can lead to exploitable mispricing opportunities.
The manager seeks to exploit this by identifying situations where the relative value of two securities trade outside the parameters of their typical relationship or by investing in “special situations”.
The fund’s investment universe comprises Australian listed securities and global securities where there is a clear relationship with an Australian “pair”. Derivatives will be used for a variety of reasons including “short-selling” a stock as part of a pairs trade and hedging.
Lonsec has a current “recommended” rating on the fund and has a high regard for the long/short pedigree and market intelligence of its portfolio manager, Paul Drzewucki. Lonsec also highlights the support he will receive from the well-resourced Ellerston investment team as well as the tight risk management controls embedded in all stages of the research and portfolio construction process.