The brand new AGF Fund, Lawrence explains, explicitly seeks to offer alpha returns whereas minimizing beta to the S&P 500. It does so by a mix of methods managed by New Holland Capital that are extra area of interest and fewer scalable. That features a big selection of relative worth methods. Lawrence notes the instance of a commodities portfolio supervisor who has recognized arbitrage alternative between commodities buying and selling at totally different elements of the world at totally different instances. The fund additionally accesses developments 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 building is kind of totally different. He claims that due to the dimensions some bigger multi-strategy funds function at, they have a tendency to pile into most of the similar trades. As a result of New Holland seeks methods that don’t scale as effectively, they’ll hold their correlation to different multi-strategy funds minimal too.
Lawrence emphasizes that regardless of the range of methods within the fund, it’s not a ‘fund of funds.’ There’s far higher intraday transparency for advisors and managers. This could permit advisors visibility into what the portfolio managers are doing from a threat perspective, as effectively giving the fund managers higher management over their very own steadiness sheets.
The AGF fund is the primary Canadian entry excessive web 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 present 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 could be a difficult dialog to speak about portfolio building and lowering publicity to an index just like the S&P 500 that has finished so effectively, Lawrence notes that methods like this fund have entered the mainstream for prime web price shoppers. Shoppers and their advisors at the moment are extra refined and have purchased into the thought of in search of non-correlated returns by different methods. Furthermore, he argues that there are adjustments within the financial surroundings that ought to encourage some dialogue round these returns between advisors and their shoppers.
