CPLIX Makes News for Unconstrained Approach that Gets Results
May 5, 2017
“When you allocate to a long-only fund, which is the traditional approach to equities, that allocation is constrained. For better or for worse, you are ‘in the market.’
“One advantage of the long/short structure—which has potential to benefit as much by the market going down as the market going up—is that a manager does not need to commit to equities if conditions argue otherwise.”
So explains Calamos Phineus Long/Short Fund Co-Portfolio Manager Michael Grant in the cover story of the April issue of the National Association of Personal Financial Advisors (NAPFA) magazine.
The bylined article elaborates on how the fund uses unconstrained investing to take advantage of a wider array of moves depending upon market conditions.
‘One of the Smartest Guys’: MarketWatch
The NAPFA article was the latest in a series of media coverage about the fund.
Earlier in the month, MarketWatch profiled Michael as “one of the smartest guys in the room,” a label given after the writer screened for active managers that beat their “Morningstar-designated benchmark over the past three and five years." (See One Year Later: CPLIX Consistency Connects with Advisors.)
The article quotes him as saying that making calls on recent big picture issues (i.e., Fed policy, European unity, China’s debt and trends in the economy, interest rates and currencies) “goes against the grain” for many managers. They prefer to “diversify around” such decisions.
Some managers have yet to adapt their business model from relying heavily on company analysis to include macro analysis, Michael says in the article.
For added insight on how to use CPLIX and what to expect of the fund, see this sponsored InvestmentNews Q&A with Michael Grant.
In the article, Michael explains, “Equities offer the promise of superior returns because they embody higher risk; if you don’t take risk, you don’t earn returns. After 2008, many long/short funds generated mediocre returns because they stopped taking risk.
“While long/short offers some diversification benefits, that should be the dominant motive. The dominant motive should be superior returns. My mandate is to weigh and assume risk sensibly, rather than avoid it," he says.
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The principal risks of investing in the Calamos Phineus Long/Short Fund include: equity securities risk consisting of market prices declining in general, short sale risk consisting of potential for unlimited losses, foreign securities risk, currency risk, geographic concentration risk, other investment companies (including ETFs) risk, derivatives risk, options risk, and leverage risk.
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