Mellon Equity Associates, an investment subsidiary of The Bank of New York Mellon Corporation, has launched its Extended Alpha Large Cap Core strategy, a 130/30 equity product.
Mellon Equity’s quantitative strategy takes its name from its ability to overweight the most attractively ranked stocks by buying up to 130 percent of the total portfolio value. The additional 30 percent exposure to favored stocks is funded with proceeds raised by shorting securities considered to be overvalued.
“We believe that utilising a limited amount of shorting significantly improves our opportunity to outperform the index in a consistent manner,” says Jocelin Reed, portfolio manager of the 130/30 strategy. “This new strategy provides a vehicle for us to incorporate skills developed over 20 years that have successfully identified overvalued securities as well as undervalued securities. Now we can actually short these over-valued securities.”
Two other BNY Mellon Asset Management units, San Francisco-based Mellon Capital Management and Boston-based The Boston Company Asset Management, have launched 130/30 strategies since December 2006. Those products now manage more than $70 million in client assets.