Those 16 funds returned 36.6 per cent on average over the period, ahead of the index which returned 32.8 per cent.
The Zenith-rated funds notched those returns at a similar level of volatility to the index, the research house noted.
Zenith’s alternatives research manager James Tsinidis said it was surprising the long / short funds had outperformed given the strong market rally over the period.
“While most of the funds on the approved list are typically long biased, many of them will hold higher levels of cash and have some shorts on. This will generally hold back returns in an upswing,” Mr Tsinidis said.
Part of the reason the reviewed funds were less inhibited is because they were using their greater mandate flexibility to more fully execute their investment ideas, Zenith stated.
Some funds have moved into less favoured parts of the market knowing they had higher cash levels or shorts in place to offset these positions. Other managers utilised their ability to increase gross leverage in the portfolios to maximise high conviction trade ideas, according to Zenith.
“Over the longer term, the approved listed funds have tended to do well in their portfolio positioning. We have gone back and looked at how the individual fund net exposures have changed over time and they generally seem to be very capable when it comes to removing or taking on more market risk,” Mr Tsinidis said.
Of the 16 funds rated in Zenith’s latest Global Long/Short Sector Review, three achieved the top ‘highly recommended’ rating, all from Platinum Asset Management, with the other 13 achieving a ‘recommended’ rating.
The only fund affected by a ratings change was the PM Capital Absolute Performance Fund, which was upgraded to ‘recommended’ after what Zenith said were some positive changes at the firm over the past year.
