Charles Clough, Jr., CFA, Chairman, Co-Chief Investment Officer, Michael Hearle, CEO, Co-Chief Investment Officer, and Robert Zdunczyk, Partner, Head of Fixed Income & Portfolio Manager, discuss the investment strategy and portfolio construction at Clough Capital Partners.
Clough Capital Partners seeks investment returns by identifying key insights into industry or economic trends, before such trends become popular with other investors. The firm has expertise in information technology, healthcare, and financials.
“Healthcare is the single largest industry theme in the portfolio right now, for a good reason… Tens of millions of dollars have been spent developing new therapies, and there’s no other place in the marketplace where you have that value that the market hasn’t done very much with, if you look at the major ETFs that reflect biotech. The value of the industry has grown enormously.” says Clough.
Clough identifies the two steps of Clough Capital Partners’ investment process. “The first involves measuring credit cycles to see how much liquidity is available to the financial markets, and that determines how much risk we will take in our portfolios. The second relates to the building of an equity portfolio, and we do that by anticipating profit cycles,” says Clough.
Their portfolio focus centers on technology, emerging market growth, and healthcare, and seeks to provide investors with global equity exposure and lower volatility. Because of the current low rate environment, long duration investments are most attractive. Moreover, the yield curve and various fixed income securities offer liquidity and hedges that can help protect the long equity book.
“We have a hedge book, and like most alternatives, we use shorting of equities as our primary tool to try to lower volatility, but in this day and age, you really need to have an expansive tool kit when you’re trying to hedge your portfolio. So, we’re always looking for the most liquid, cost-effective hedge possible,” says Zdunczyk.
Using such strategies, Clough Capital Partners’ funds were down only 15% at the end of March 2020, while the market was down 30%, and they successfully avoided having to panic-sell to reduce volatility at the bottom of the market.
The Clough Global Long/Short Fund seeks to provide long-term capital appreciation by taking both long and short positions in equity securities in US and non-US markets. Short positions are used to generate alpha, while other hedging instruments are used to reduce volatility during market decline. The Fund invests in ETFs, derivative positions, and US Treasury securities to limit the Fund’s exposure to market declines.
Clough Capital Partners was founded in 2000 by Charles I. “Chuck” Clough, and is now a Boston-based $2.5 billion global alternative manager. As of March 31, 2021, over 80% of their assets are managed in various long/short strategies. Clough Capital Partners is focused on fundamental research with long-term, global investment themes.
Clough has three closed end funds, GLV, GLO, and GLQ, in the market, and an open-end vehicle retail product in addition to their institutional offerings.
To learn more, catch a replay on Clough Partners’ recent webcast: Global Equity Opportunities.
Global growth exists in targeted sectors around the world. Go anywhere long and short strategies can help to reduce overall portfolio risk while adding valuable exposures. Join us for this unique presentation that will cover:
- Idea generation for alpha seeking exposures
- Pandemic-fueled technology and healthcare sector opportunities
- Global bottom-up growth stories
- Portfolio construction, risk and asset allocation considerations