130/30

With over a decade of experience managing long/short portfolios, Martingale began actively managing 130/30 accounts in 2004, and was among the first firms to offer them in the institutional marketplace. We manage them in value, core and growth styles.

Long-only, active equity mandates typically come with two constraints that limit an investment manager’s ability to outperform the benchmark: a prohibition on short sales, and a requirement that the stock selection universe be limited to the securities in the benchmark. Together, these limitations severely shrink the scope and direction of trades available to the manager. Because Martingale’s systematic approach to stock selection affords us an opinion on the prospects of almost every U.S. stock of consequence, allowing a limited amount of short selling and broadening the investment universe beyond the benchmark enables us to exploit more of our investment insights to increase the expected return in our clients' portfolios with only a small increment in estimated risk.

Typically used as large cap equity mandates, Martingale’s 130/30 strategies provide an attractive alternative to the traditional long-only approach. Given our many years of experience actually managing long/short portfolios, Martingale is especially well qualified to handle these assignments. We thoroughly comprehend the nuts and bolts of selling short, as well as the impact of the short positions on the total portfolio. Similarly, our extensive experience with risk control and systematic portfolio construction techniques is directly transferable to managing 130/30 portfolios. We expect 130/30 portfolios to deliver 2.0% - 3.0% of excess return over a full market cycle, with 2.5% - 4.0% of expected tracking error versus the benchmark.

130/30

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