The brand new AGF Fund, Lawrence explains, explicitly seeks to supply alpha returns whereas minimizing beta to the S&P 500. It does so by way of a mix of methods managed by New Holland Capital that are extra area of interest and fewer scalable. That features a big range of relative worth methods. Lawrence notes the instance of a commodities portfolio supervisor who has recognized arbitrage alternative between commodities buying and selling at completely different elements of the world at completely different instances. The fund additionally accesses traits like disaster insurance coverage and insurance coverage bonds.
Hedge fund methods like quant, fairness lengthy/shorts, macro and others are folded into this fund, although Lawrence says that the portfolio development is sort of completely different. He claims that due to the dimensions some bigger multi-strategy funds function at, they have an inclination to pile into lots of the identical trades. As a result of New Holland seeks methods that don’t scale as properly, they’ll hold their correlation to different multi-strategy funds minimal too.
Lawrence emphasizes that regardless of the variety of methods within the fund, it’s not a ‘fund of funds.’ There’s far better intraday transparency for advisors and managers. This may permit advisors visibility into what the portfolio managers are doing from a danger perspective, as properly giving the fund managers better management over their very own stability sheets.
The AGF fund is the primary Canadian entry excessive internet price traders will get to a New Holland technique. Primarily based within the Cayman Islands, New Holland Capital has virtually 20-years’ expertise working cash for establishments, together with their preliminary work as an unique advisor to Dutch pensions. They at the moment handle round $6 billion US in belongings, with $1.4 billion within the Tactical Alpha Grasp Fund that the brand new AGF product is accessing.
Whereas it might be a difficult dialog to speak about portfolio development and decreasing publicity to an index just like the S&P 500 that has carried out so properly, Lawrence notes that methods like this fund have entered the mainstream for top internet price shoppers. Purchasers and their advisors are actually extra refined and have purchased into the concept of looking for non-correlated returns by way of various methods. Furthermore, he argues that there are modifications within the financial setting that ought to inspire some dialogue round these returns between advisors and their shoppers.