State Street Global Advisors today announced the launch of its Canadian Index Plus Edge strategy, designed to provide a bridge between ow risk/low value-added passive portfolios and high risk/high-value added active strategies.
Canadian Index Plus Edge further extends State Street’s suite of investment strategies that use its “Edge” methodology, an extension strategy also widely known as “130/30,” that seeks to provide the best of long-only and long/short approaches.
Institutional Investors and pension funds have shown significant interest in 130/30-type strategies because they increase the active opportunity set, and allow investors to benefit from the use of hedge fund techniques while still remaining closely tied to the benchmark characteristics. They also allow investors to invest in the strategies within their traditional equity allocations, rather than in the alternatives category.
The Canadian Index Plus Edge strategy takes short positions up to 10%, which in turn fund an additional 10% of long positions, thereby maintaining net market exposure at 100%. It aims to outperform the S&P/TSX composite index’s annual return by 2%.
“The creation of Edge strategies is a global strategic initiative and we are excited to add this new Canadian strategy to our existing offerings. Canadian Index Plus Edge capitalizes on two of the things that we do best at SSgA – -build successful stock selection models and control risk,” said Gregory Chrispin, president and managing director of SSgA in Canada.
SSgA is at the forefront of providing alpha generating strategies to its clients and has established itself as an industry leader in providing extension or “Edge” strategies. The company has recently exceeded US$10 billion in Edge strategy assets under management, a milestone that highlights SSgA’s experience as a disciplined manager of long-short equity portfolios. SSgA has been ranking stocks from best to worst for more than two decades, forming opinions on virtually every investable stock in the world. SSgA’s risk-controlled equity strategies cover the spectrum from enhanced strategies to long-short solutions.
Canadian Index Plus Edge leverages this experience to provide investors with a strategy that exercises tight risk controls and a disciplined investment process which grant investors the opportunity for higher risk-adjusted returns.
“The strategy takes advantage of loosening of long-only constraints by improving the transfer of our skill sets into more optimal portfolios to deliver increases in expected returns with a limited increase in active risk. It also provides global investors with a new means to take advantage of the investment opportunities in Canada’s equity market, which has proven to be one of the strongest of the developed equity markets over the last four years,” said Sophie Mayrand, head of active quantitative equities at SSgA in Canada.
Canadian Index Plus Edge is available globally.
State Street Global Advisors launches Canadian Index Plus Edge
Long/Short strategy increases opportunity set of potential returns
- By: IE Staff
- July 9, 2007 July 9, 2007
- 09:30