Montreal alternative investment managers benefit from running relatively smaller hedge funds compared to their American counterparts. In the past two decades, the number of hedge funds based in Canada has increased substantially. Smaller and more nimble than their U.S. and European counterparts, Canadian hedge funds have performed better than many others in recent years and decidedly better than the average mutual funds.
Some successful and established Candian hedge funds are based in Montreal, Canada’s second-largest financial center. This City has experienced rapid economic growth in the past two decades and has enjoyed substantial expansion in infrastructure, financial services, and foreign investment.
Investing Montreal alternative investment managers
Hedge funds developed as a means to generate gains while protecting the investments of high net worth individuals and institutions from unexpected downturns. Drawing from an almost unlimited menu of investment vehicles and strategies, hedge fund managers attempt to take advantage market upsides while dampening the potential for losses.
Investment in Canadian hedge funds is usually limited to individuals with at least $1 million in investible capital and at least a $250,000 annual income. The rationale for limiting investment only to wealthy people is that they may be more likely to weather a significant loss. Less well-heeled investors looking for noteworthy gains may be wiped out in a poorly managed fund or severe downturn.
Besides high-net-worth individuals, institutional investors including pension funds constitute a notable percentage of hedge fund management portfolios.
Canada Investment Outlook
The Economist Intelligence Unit, according to the Emerging Managers Board, reports that Canada is positioned to be the top country in which to invest among all G-7 countries during the upcoming three years. The group cited numerous positive aspects of the Canadian business environment including low corporate tax rates, reasonable business costs, a highly stable financial system, high education levels, economic freedom and more.
As reported by the Globe and Mail, “smaller is better” when it comes to hedge funds. One of the challenges of some massive U.S.-based hedge funds is to create ways to spread funds without directly affecting the markets. Smaller, creative funds can operate beneath the radar of competitors without disrupting the markets in which they operate.
Many of the strategies employed by hedge fund managers are not available to equity and bond fund managers. While mutual equity and bond funds have clearly defined and inflexible policies that are outlined in the fund’s prospectus, hedge fund managers are given considerably additional leeway in their approach. As a result, fund managers enjoy more flexibility to respond quickly. Hedge fund managers may invest in currencies, options, and commodities along with equities while employing a broad menu of creative strategies to maximize wealth.
Many hedge funds use “funds of funds,” whereby a collection of diverse funds provide optimal gains and protection.
Arbitrage strategy is an excellent example of hedge fund flexibility and quick response.Managers with access to real-time market data can instantly trigger a simultaneous purchase and sale of currency, for instance, when market price differences between the buy and sell result in an instant profit for the fund. Arbitrage may be exercised whenever pricing anomalies occur, whether in currencies, M&A situations between two public companies, commodities, or other situations.
Hedge fund managers in Canada and elsewhere are often well compensated for their successes. The average fees for hedge fund investments are 2% of the investment to cover expenses and up to 20% of the net gains. While these amounts seem significant compared to standard equity funds, most investors have little problem sharing one-fifth of a 15 or 20% gain, when it occurs.
Also, most hedge funds have a relatively long time horizon of two or more years before investments can be redeemed. This timeframe allows the hedge fund manager enough time for the plans to execute fully.
A popular hedge fund strategy is long/short investing. Hedge fund managers carefully research and identify equities or other investments that they forecast will be rising during the coming period and ones that they expect to fall. To execute the long/short strategy, the hedge fund manager will assume a long position on the equities expected to rise and a short position on those that should fall. Clearly, if everything works as planned, the potential for gain is substantial. However, even if the short position goes up, any losses are counterbalanced by the long position.
Montreal and Quebec-Based Hedge Funds
Our BT Global Growth fund focuses on growth with a protective hedge against downside developments. We specialize in long/short equities and commodities trading. We do not enter into leveraged investments.
We have been a Montreal hedge fund since our inception in 2006. We strongly believe in Montreal’s strong talent but also in the city’s potential to attract significant foreign investments . There are many hedge funds headquartered in and around Montreal. Each specializes in specific investment strategies. Below we describe six examples of Montreal-based equity, arbitrage, and long/short hedge funds.
Crystalline employs arbitrage strategies mostly within the Canadian market for many of their clients. Their funds include the Amethyst Fund, a low volatility hedge fund; Emerald Global Macro Fund, using tactical instruments based on activity in the major economies; and the Topaz Multi-Strategy Fund which may use the full range of investment opportunities. Crystalline was founded in 1998 and reports CAD 252 million in assets under management. Learn more about Cristalline Management.
As the name suggests, Altervest takes an alternative approach to investing. Utilizing a broad range of instruments not available to conventional funds, this manager targets capital preservation with long-term gains for investors. Founded in 2010, this woman-owned firm operates four different fund groups with strategies that range from Pure Alternative Strategies to an Enhanced Target S&P fund. Learn more about Altervest.
Opened in 2005 by an experienced banking veteran, Jean Turmel, Perseus employs multiple strategies. The firm has CAD 100 million under management and uses futures contracts, swaps, cash bonds, and options primarily to manage the liquidity and risk tolerance of their investors.
Opened in 2007, Galliant manages approximately CAD 85 million in assets. The manager handles high net worth clients using long/short equity strategies. With a bottoms-up approach to investing, Galliant exercises flexibility with event-driven decision-making and analyzing fundamental growth opportunities.
Like some other firms, Rivemont operates as a conventional financial management manager as well as a hedge fund-type company. Utilizing long-short strategies, Rivemont Absolute Return Fund seeks to preserve and grow wealth with high net worth using alternative strategies. Currently managing over CAD 30 million, Rivemont opened in 2010. Learn more about Rivemont.
Lakeroad depicts their company as a boutique alternative investment firm that works exclusively with wealthy individuals and institutional clients. Founded in 2012, Lakeroad utilizes long/short strategies primarily with North American equities. With CAD 50 million under management, Lakeroad’s employs a philosophy that uses a systematic portfolio profile to preserve and build wealth for their clients. Learn more about Lakeroad.
Choices of Montreal alternative investment managers
A wide selection of hedge funds is available for investors interested in working with Quebec-based companies. Each offers its unique approach and creative investment style. All are designed to increase wealth and protect against the unexpected. Before investing, it is important to assess the performance and risk potential of the investment strategy.
We hope you found this article on Montreal alternative investment managers interesting. If you have any questions about our Montreal based hedge fund or our strategies, we invite you to contact us today to set up an appointment. It will be our pleasure to answer your question about how alternative investments can fit your overall investment strategy and portfolio structure.