FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. The ETF, which has a one per cent management fee, has gained a per cent since it began trading on the TSX in January and closed Thursday at $20.20.Morningstar Research, as of December 31, 2022. Instead, half the fund is used for offsetting long and short positions, while the other half - along with money that the fund will borrow - is kept in low-risk money market funds. Aizanman describes Desjardins’ ETF as a low-risk strategy because it does not use high leverage or derivatives. Hedge funds are usually associated with high-risk strategies and so it would be easy to paint liquid alts with the same brush, Aizanman said, but that’s not necessarily the case. “There are plenty of strategies that are non-market correlated that fit this exact point in time well and there’s going to be people who are trying to get those solutions to market.” “The rush to get liquid alts is really predicated on where we are in the market … and the need for non-correlated market instruments akin to hedge funds,” said Jay Aizanman, director of business development at Desjardins Global Asset Management. According to a 2018 Scotiabank report, the Canadian market could grow to be worth $20 billion. in 2013 and in only five years, the liquid alt market has rapidly expanded to be worth US$225 billion. Similar regulations were dropped in the U.S. “It’s a building block solution to be used in building a broadly based diversified portfolio,” he said.Ĭanadian market participants are hoping to replicate the success such funds have had in the United States. Instead, like many liquid alts, it’s supposed to one piece of the puzzle. The fund isn’t meant to be invested in alone, he said. Green said the fund, which charges a 0.9 per cent fee, is meant to dampen volatility when combined with traditional portfolios, but wouldn’t go as far as calling it low risk. ![]() Thirdly, the fund will target risk premia. On the long/short side, the fund will also identify the most popular stocks that alternative asset managers are buying and take long positions in them while shorting S&P 500 or futures contracts and any individual names it deems unattractive. On Monday, Franklin Templeton, known as a provider of traditional mutual funds, will add to the expansion.įranklin Templeton’s liquid alt fund will give investors access to three different strategies, according to Duane Green, president and CEO of the firm’s Canadian division.įirst, the fund will index 50 hedge funds and aim to replicate their returns. ![]() In the mutual fund space, Mackenzie Investments, iA Clarington Investments, CI Investments and CC&L Funds have each launched multiple products in the past two months.
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