The Canadian hedge fund marketplace has been growing vigorously over the past couple of years, keeping pace with international trends.
The Canadian hedge fund marketplace has been growing vigorously over the past couple of years, keeping pace with international trends. This growth has been compounded by the rise of energy and precious metals, both major constituents on Canadian exchanges. Many managers in the marketplace keep a very finely tuned eye on the energy and mining sectors, and at least part of the allocations to the country’s hedge funds, particularly from international investors, are a play into these booming markets.
Canada has a savings and investment culture and self-managed retirement savings are common – resulting in a sizable, welleducated investment management community. As alternative investment strategies have moved into the mainstream, many of Canada’s asset managers have kept abreast of these innovations and are starting to provide them for their clients. In its capacity as a fund administrator and custodian, RBC Dexia services assets on behalf of a wide range of investment managers, ranging from pension funds to long-only asset managers and hedge funds, and we see the use of alternative strategies beginning to extend from the pure hedge fund community to more traditional asset managers.
In the past two years, Canada’s securities regulators have begun allowing mutual funds access to shorting and we have several institutional clients looking into and operating emerging approaches such as 130/30 strategies.
RBC Dexia provides administration, custody, record-keeping and securities lending services to many Canadian hedge funds, and a growing number of these clients also utilise our securities borrowing and financing products. We also provide several ancillary services including portfolio analytics and foreign exchange trading to our clients.
Part of our strategic focus is to provide a complete set of services to the alternative community; we are focused on this goal and are investing heavily in ur technology and capabilities. These investments will also benefit traditional asset managers as they begin to embrace shorting – a trend we see as a natural progression for the asset management community.
As it becomes harder to draw the line between alternative and conventional investment strategies, we expect to see many traditional asset managers taking on long/short approaches to hedge their portfolios.
One of the innovative facets of RBC Dexia’s product range is our ability to provide securities borrowing and financing products to these managers as they hedge their portfolios. We believe this business offers great possibilities for us to extend our relationship beyond post-trade servicing by supporting their portfolio construction strategies.
Brad Taylor is global head of investment finance and hedge fund services with RBC Dexia in Toronto
