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Quebec Absolute Return Fund?
On Tuesday, the Caisse de dépôt et placement du Québec released a statement, HR Strategies Announces the Launch of a Québec Absolute Return Fund:
HR
Strategies, a Québec investment management company, announces the
establishment of the Fonds Stratégique à Rendements Absolu HRS (SARA
Fund), which will invest its assets with Québec absolute return
managers. The Fund will be available to Québec and Canadian investors.
HR Strategies will act as General Partner of the SARA Fund, which benefits from an initial investment of $175 million. The main investors are the Caisse de dépôt et placement du Québec ($60 million), Fondaction CSN ($55 million), Fonds de solidarité FTQ ($50 million) and the Régime de retraite de la CSN ($10 million). More investors may be added in the coming months.
This
new fund will rely on fundamental analysis to select managers, based
on their expertise, reputation and rigour. The Fund principal objective
is to deliver steady, healthy returns to its investors — aiming for an
average annual return of 5% above the Treasury Bill rate of return.
"In Québec, we have managers who are just as qualified as those of
other major financial centres. The SARA Fund will not only enable
companies and managers to develop, but will also allow investors to
reduce their portfolio risk and obtain attractive and stable returns,"
said René Perreault, President of HR Strategies.
"We favour managers who are known for their qualitative strategies and have proven fund management track records," said Mr. Perreault.
"The portfolios will be completely transparent. We will invest in
highly liquid strategies, with managers who will trade primarily
stocks, bonds and liquid futures contracts."
"The Caisse's participation in the SARA Fund will both provide the
institution with attractive returns relative to the level of risk and
boost the development of Québec's financial expertise. HR Strategies, a
partner the Caisse knows well, has an interesting road map and is
renowned for managing absolute return funds of funds — in addition to
offering very reasonable management fees," said Mario Therrien, Senior Vice-President of Hedge Funds at the Caisse de dépôt et placement du Québec.
"This
fund will have a developmental effect on Québec's financial industry.
It will stimulate activity in the sector. Many features, including its
transparency and manager compensation structure, are based on the best
practices of socially responsible finance, helping position Montréal,
Québec's largest city, on this forward-thinking idea," said Geneviève
Morin, Chief Financial and Corporate Development Office at Fondaction
CSN.
"In addition to relying on the
talent we have in Québec's financial sector, the SARA Fund promotes the
emergence of new portfolio managers and, at the same time, supports
Québec entrepreneurship in this promising sector. In line with our
mission, this initiative also meets the objectives of the major
Montréal Finance project," said Gaétan Morin, Executive Vice-President
of Investments at the Fonds de solidarité FTQ.
HR Strategies is a member of the Hedge Fund Standards Board (HFSB), an
international, London-based organization that aims to implement the
industry's best practices and standards, particularly about governance,
transparency and manager/investor alignment of interest.. The Caisse de
dépôt et placement du Québec is also a member of the Board's Investor
Chapter, which includes 30 institutional investors from Europe, Asia and North America. Mr. Therrien of the Caisse also serves on the HFSB Board of Trustees.
About HR Strategies
HR Strategies Inc. (HRS) is an independent investment firm formed in 1993 and based in Montreal, Canada.
HRS manages portfolios of hedge funds and other alternative investment
strategies for institutional and high net worth investors. HRS is
regulated by the Autorité des marchés financiers (AMF).
About the Caisse de dépôt et placement du Québec
The
Caisse de dépôt et placement du Québec is a financial institution that
manages funds primarily for public and private pension and insurance
plans. At December 31, 2010, it held $151.7 billion
in net assets. As one of Canada's leading institutional fund managers,
the Caisse invests in major financial markets, private equity and real
estate. For more information: www.lacaisse.com.
About the Fonds de solidarité FTQ
The Fonds de solidarité FTQ helps drive our economy. With net assets of $7.7 billion, as at November 30, 2010,
the Fund is a development capital investment fund that channels the
savings of Quebecers into investments in all sectors of the economy to
help further Québec's economic growth. The Fund is a partner, either
directly or through its network members, in 2,052 companies. With its
577,511 owner-shareholders, it has helped, on its own or with other
financial partners, to create, maintain and protect 150,133 jobs. For
more information, visit www.fondsftq.com.About Fondaction CSN
Fondaction
CSN invests in Québec SMBs to contribute to the maintenance and
creation of jobs in Québec from a sustainable development perspective.
It manages $800 million in assets,
representing retirement savings from more than 100,000 shareholders. It
is the financial partner of about 100 companies and partner and
specialized funds in every industry and the social economy. www.fondaction.com.
I'm
glad to see the Caisse and others are promoting Quebec's financial
sector. The Ontario Teachers' Pension Pan has seeded several Ontario
funds of funds and hedge funds. It's about time we started promoting
Quebec's talented managers.
I managed to contact Philippe Dubois, Vice-President at HR Strategies who is currently in Europe. I asked him about the terms they will be offering and he had this to share:
...the
Fund will invest with managers at various stages of their development
(emerging and established); as such, we have decided not limit
ourselves to a single business model (equity/top line revenue share/
rebate/ etc.). I look forward to discussing this when I return.
Should
pension plans be in the seeding game? It depends where and how deep
their knowledge of the strategies and managers they're funding. I'm all
for it because it helps local managers develop their business and then
go solicit funds from global pension and sovereign wealth funds.
I
told Philippe that I know of five seasoned managers in Montreal who can
easily deliver T-bills + 5% and even higher with low risk. All liquid
and transparent strategies. There are a few kinks to be ironed out with
this new fund (one of them is any potential conflicts of interest), but
I'm sure this will be a positive force for Quebec's financial sector,
which has been in decline for years. I for one fully endorse the SARA
Fund and hope more initiatives like this one are in the works.
***Addendum: Established Quebec absolute return funds***
Below, I add a list of a few established alpha managers in Quebec:
1) Sectoral Asset Management:
Founded in 2000, Sectoral Asset Management Inc. is an industry-leading
specialist in managing global investment portfolios in the healthcare
sector.(mostly long-only but can offer portable alpha on their benchmark
which they have outperformed over the years. Sectoral won a mandate from Norges Bank Investment Management, the investment management firm of the government of Norway.
2) Gestion Critallin: Run by Marc Amirault, one of the most experienced
convertible bond arbitrage managers in Canada, this is one of the best hedge
fund secrets in Canada. Cristallin is also exploring expanding into
more liquid strategies, and my bet is that it can easily become a top
Canadian and global multi-strategy fund.
3) Hexavest:
An investment firm that specializes in equities and tactical asset
allocation for institutional clients. This is the old Natcan investment
management team run by Vital Proulx, one of the best tactical asset
managers in Canada. This firm is a success story and they are already
managing billions and can expand considerably (might become Canada's
Bridgewater).
4) Fjord Capital Management: Montreal-based
Fjord Capital is a specialized currency manager for institutional
investors. Excellent team and they specialize in both alpha and hedging
strategies.
5) Perseus Capital Inc.: Run by Jean Turmel, whom I had the pleasure of interviewing last year,
this fund is a global macro fund specializing in liquid alpha
strategies, including L/S equity. With the recent addition of my former
supervisor at PSP Investments, Pierre Malo,
the fund will also look add currency alpha strategies. These are two
veterans of Quebec's investment management community with the strongest process in the business
and high risk-adjusted returns. They are currently looking for a few
strategic partners (contact Pierre at pierremalo.inc@gmail.com).
6) Inncocap Investment Management:
Innocap offers hedge fund managed account solutions, using a
conservative approach to hedge fund investing with a strong emphasis on
transparency, liquidity, asset control and risk management.
7) Fiera Sceptre:
Run by Jean-Guy Desjardins, arguably the best entrepreneur in Quebec's
investment management industry, this is a leading-edge independent
investment management firm focused on delivering competitive and
tailored multi-style investment solutions to a diversified clientele of
investors.
8) Formula Growth: A specialist in U.S. emerging growth stocks, Formula Growth manages Formula Growth Fund for individual investors, Formula Unit Trust for tax-exempt institutional investors and the Formula Growth Hedge Fund.
Formula Growth is an independent Canadian company owned by its
employees, who are all investors in the Formula Growth Fund and the
Formula Growth Hedge Funds.
9) AFC Capital:
AFC Capital is an investment firm specializing in (L/S) North American
equities and is regulated by the AMF. The fund is an equity market
neutral fund with a fundamental process based on earnings projections.
They deliver high risk-adjusted returns and did not lose money in 2008.
(Key contact: Alexandre Gagnon, VP Risk Management and Finance at
agagnon@afccapital.com).
10) Majestic Asset Management:
Run by David Bilodeau and Denis Paquette, Majestic is a Commodity
Trading Advisor (CTA) registered under the US Commodity Exchange Act
and is a member of the National Futures Association (NFA). Majestic’s
flagship fund, the MAJESTIC GLOBAL DIVERSIFIED FUND, offers investors
exposure across a wide range of sectors and commodities such as grains,
food and fibers, meats, energy products, metals, currencies, stock
indices and global bonds.
11) Plensa Pineault:
A Quebec-based capital management company. The firm aims to capitalize
on trends in futures markets globally through the use of a proprietary
quantitative model and a systematic approach to investing.
12) Sigma Alpha Capital: A privately held firm which was founded in May 2003. Ownership of the firm is divided among its four senior partners: André Marsan, Luc Lapointe, Jean-Sébastien Garant and Jacques Authier. Their managers
use futures to structure the portfolios in order to obtain positive
returns over the medium term, regardless of the economic and financial
outlook.
13) Swing Capital: Swing Capital Inc. is an alternative investment manager whose broad
purpose is to preserve and increase portfolio wealth by offering a
unique uncorrelated alternative investment program in managed Foreign
exchange to qualified investors. Swing Capital Mission is to offer a unique investment vehicle
targeting 15-20% yearly returns while maintaining low to negative
correlation to both standard and trend following portfolios. The Swing Capital Team is composed of 3 partners:
- Frederic Bettan: CEO & Managing Partner
- Michel Nahmany: COO & Managing Partner
- Robert Sipko: CTO
Both of Swing Capital Managing partners, Mr. Bettan and Mr. Nahmany
possess unique core skills in the financial industry. Both have
acquired an extensive Foreign Exchange trading expertise in major
centers around the world (Montreal, London, and Toronto).
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"I told Philippe that I know of five seasoned managers in Montreal who can easily deliver T-bills + 5% and even higher with low risk. All liquid and transparent strategies."
Sounds like you should open your own hedge fund Leo, and copy these "sure thing" strategies, since they are so liquid and transparent.
I've allocated to the best hedge funds all over the world. I don't get all hot & horny over hedge funds and know that it's a tough business. Some of the richest and happiest guys I've met in Montreal are anonymous prop traders you've never heard about. They manage their own millions and do not answer to any institutional investor. If I had a choice of collecting 2 & 20 and the stress of managing a hedge fund (including all the marketing bullshit, RFPs, stupid institutional managers breathing down your neck) or managing my own portfolio, I'd opt for the latter. There is way too much hype about the glory of managing a hedge fund. Trust me, it's not as easy or as glorious as it seems.
Leo, if money can buy happiness then it is beyond glorious. The hedgies/VC guys I know spend their spare time (and lots of it) jetting between their various homes, yachts etc. and when bored they buy more real estate and build ever bigger castles while pursuing various interests eg art, car racing, yacht racing, exotic cars etc. I also know guys who run their own book some of whom are structured to deploy their own as well as others capital sometimes in partnership with pro money guys.
You put the lime in the coconut and shake it all up.
Popped into my head for some odd reason after reading your comment.
from the taxpayers' pockets (via public sector pension plans) to the pockets of the hedgies / fund of funds; no doubt a boost for Bombardier and Palm Beach real estate and if it doesn't work out, no problem, the taxpayer has deep pockets.
With the tens (hundreds) of billions sloshing around the vaults of the Caisse and a business environment in La Belle Province that rivals that of any upstanding jurisdiction North of Cape Town I can only imagine the sheer joy that this development has brought.
Some useful links:
http://www.feadship.nl/
http://www.barrettwelles.com/
http://www2.bombardier.com/en/3_0/3_2/3_2_3/3_2_3.jsp
What do you have against Bombardier? It's a great company, a global leader and so what if they get gvt money?!? They've been getting contracts from all over the world and delivering great results.
French Canadian bitchez!
Thanks for your insight on this one. Thorough analysis.