According to several reports, there are very few 130/30 funds with track records of over 3 years (see related posting). So issuing an RFP stipulating a requirement for a three year track record may sound a little odd. Unless they have identified a secret un-tapped pool of 130/30 funds, such requests for proposals likely elicit a relatively underwhelming response compared to traditional RFPs. According to research by Lee Munder Capital Group, only around 15 or 20 such funds exist today.
Source: Lee Munder Capital Group / QWAFAFEW
So there are a few veterans. But relative to the abundance of long-only funds, it reminds us the economics professor in Ferris Bueller’s Day Off (Ben Stein, right), whose appeals for class participation go unrequited – as in:
“We’re looking for a manager to execute a short…Anyone?…A short what?…A short extension strategy. You need a three year…Anyone?…Anyone?…Track record. Although few of you actually have this, we require it because of what?…Because of what?…Anyone?…Because we’ve always done it that way.”
Yet after issuing one such RFP in the summer (see related posting), another Massachusetts town has returned to the trough for more (view RFP). Either there is an untapped pool of 130/30 funds in that state, or the City of Plymouth has redefined “first mover advantage”.