Montgomery Asset Management, the U.S. investment subsidiary of Commerzbank AG, Frankfurt, plans to expand its lineup of broker-sold mutual funds.
The San Francisco-based fund company, which manages two "load" funds, with $50 million of assets, hopes to add several offerings, a spokesman said. Montgomery also manages 20 no-load funds, with $5 billion of assets.
While the spokesman noted that Montgomery is in a "quiet period," with filings before the Securities and Exchange Commission, he did identify one of the proposed load portfolios.
Set to launch this quarter, the Montgomery U.S. Market Neutral Fund would take advantage of the Internal Revenue Service's elimination last year of the "short-short rule," he said.
The rule limited funds' profits from short-term trading-less than three months-to 30% of gross income. Under the rule, strategies that involved frequent trading, such as shorting stocks and the use of derivatives, were classified as short-term transactions.
Montgomery's Market Neutral fund is designed to limit risk and ignore market gyrations. One way the fund could manage risk is by buying stocks that are expected to rise and selling an equal amount of stocks in the same industry that are expected to fall, said the spokesman. "It's like running two portfolios," he said. This could not be done under the short-short rule.
Separately, Montgomery recently made portfolio managers' quarterly conference calls available on its Web site for financial professionals, the spokesman said. The company already makes general commentary from fund managers available to retail investors who access its no-load funds on another site, he said.
Montgomery Asset Management was formerly owned by Montgomery Securities, now a unit of NationsBank Corp.
