Vinva adds extra dimension to portfolios
October 2024
Did you know it’s possible to make money from shares when they fall, not just when they rise? Vinva Investment Management is one fund manager that achieves this goal for investors in some of our Cornerstone portfolios.
Vinva’s Equitised Long Short Fund gained 37% in the year to September 30, outperforming the S&P/ASX 200 index bv 15.6%, by both buying Australian shares and also short selling shares.
Short selling is a common strategy used by professional investors to profit from falling share prices. To do so, they borrow shares and sell them in anticipation the price will fall. The shares are later bought back at the lower price and returned to their owner.
For example, a fund manager might think that a company’s share price is likely to fall from $100 to $50. They could borrow the shares, sell them for $100 and buy them back at $50. The profit is the $50 difference between the $100 sale price and lower price at which the shares are rebought1 .
Long short funds are useful additions to diversified portfolios as they allow investors to generate return from a broader range of strategies than might typically be the case.
Vinva’s strategy aims for long positions of up 170% of investors’ capital and short positions of up to 70%.
The Sydney-based manager is a “quantitative” share investor, which means it uses fundamentally based, data-driven models to select stocks and manage its portfolio. The business was established in 2010 and has since built a team of around 30 people.
As a quantitative manager, it takes smaller positions in a large number of stocks to reduce investment risk. Its portfolio typically holds 220-250 companies from the S&P/ASX200 Index.
To find out more about Vinva Investment Management, speak to your adviser.
1 Other costs may be associated with shorting shares (such as the cost to borrow the shares or paying any dividends to the original owner of the shares).
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