Schroder GAIA Contour Tech Equity

Contour Asset Management was founded in October 2010 when partner Brummer & Partners, granted the mandate of the Tech equity long short strategy exclusively to Contour, which now has approximately $1.5bn AUM within the strategy. The PM (David Meyer) has over 20 years of buy-side experience, starting his career at Morgan Stanley covering software and IT companies, from which he became a technology analyst at Brummer and soon after becoming a PM for the Manticore Fund, which is now solely managed by Contour. The fund runs with a low net exposure, generally between +/- 25%, with exposure directed by bottom up research and not via market calls, though during extreme times, the PM is more willing to actively manage the net (eg Q1-2020, moving from net long 20% to flat, brought down gross exposure, and top 10 concentrations). The portfolio is traditionally built of more idiosyncratic and under-owned names, and not reliant on FANG stocks, helping to maintain a low beta compared to peers. Plus, selections are typically style agnostic, rather than creating a portfolio with an over-dependence on growth outperformance. A strong Q1 for the fund was driven by the short book, returning 27%, with eight of the top ten contributors being shorts and all of the top ten detractors were longs. The fund generated significant positive P&L from its short exposure to value factor, while losses were well contained within the long exposure to Growth and GARP. Moving out of the current environment, the PM believes this experience will meaningfully shape both consumer and corporate behaviour with many pre-existing trends likely to be accelerated, but also some new themes spawned, with areas on the radar being the retail and online consumer landscape, entertainment & content consumption, plus also a fresh corporate focus on fixed cost minimisation. For portfolio construction, the fund typically consists of 30 longs and 50 shorts, with an investment horizon of generally 6-24 months (shorts often towards the shorter end, exhibiting a higher portfolio turnover). Gross exposure tends to sit around 210%, with 250% the upper limit. The portfolio is run typically in a concentrated fashion with the top ten longs accounting for c.50-60% of NAV, while top ten shorts cove 30-40% of NAV. The mandate enables the PM to invest globally but the book is predominately US-centric, c.85% of the book.