Financial headlines in mid-August teemed with accounts of activist investors as Carl Icahn tweeted about his large stake in Apple and demanded the company do an immediate stock buyback; William Ackman quit the board at J.C. Penney as his two-year effort to turn around the struggling retailer ended in failure; and Nelson Peltz disclosed his hedge fund firm bought a chunk of DuPont stock and wanted changes made at the iconic chemical company to boost shareholder value.
The 13D Activist Fund is marketed as an event-driven strategy aimed at generating returns that aren’t correlated to the overall equity market. As of September 5, the fund had gained 28% on an annualized basis and attracted nearly $78 million in assets. “It had $6 million at the end of 2012,” says Squire, founder and principal of 13D Monitor, a research firm focused on 13D filings and shareholder activism.
Expense ratios for the fund’s three share classes range from 1.50% to 2.50%. The investment minimum is $2,500 for retail shares and $1 million for institutional shares. The fund is available on the platforms of Schwab, TD Ameritrade, Fidelity, Pershing and UBS, among others.
Some advisors might abstain from the fund because of its short-term track record. Others might consider it a packaged way to ride the activists’ coattails.
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