Australian fund manger L1 Capital has successfully completed one of the biggest floats of an investment fund in recent years, with the L1 Long Short Fund making a steady start to trading on the Australian share market .
L1 Long Short Fund was at $1.995 at 1229 AEST - 0.5 cents below its issue price of $2.00 per share - after earlier lifting to $2.01.
L1 Long Short Fund, which will be managed by Melbourne-based L1 Capital, raised $1.3 billion through an oversubscribed initial public offer of shares.
In its initial prospectus, L1 Long Short Fund sought to raise up to $600 million, but after a strong response from investors issued a supplementary prospectus to raise $1.3 billion.
The company's portfolio is expected to be predominantly comprised of long and short positions in Australian and New Zealand securities, with up to 30 per cent exposure to global securities.
L1 Capital co-founder and joint chief investment officer Mark Landau says he is delighted with the investment community's "fantastic response" to the float.
He said a long short fund is a fund that both buys shares (going long) on the expectation that their value will rise, and sells stock (shorting stocks) on the expectation that the value will decrease.
"So you've got the ability to make money from shares going up and shares going down," Mr Landau said on Tuesday.
A long short fund could be advantageous during periods of high market volatility.
The listed L1 Long Short Fund will hold a portfolio of stocks in line with the unlisted L1 Capital Long Short Fund which is closed to new investors.
Mr Landau said L1 believed that global equities are quite fully-priced at the moment.
"We're in what we believe is the late stages of a bull market where in the US in particular it's year nine of the post-GFC (global financial crisis) recovery.
"And historically, that makes it one of the longest and largest bull markets of all time, so given that backdrop, we're quite cautious on the outlook, and we're positioning our portfolio to hold up well if there is any pull-back in markets."
Mr Landau said the Australian market is less stretched than some overseas markets but currently does not offer particularly strong earnings growth.
