JCClark, manager of The Preservation Trust, one of Canada's largest and oldest hedge funds, is to open additional capacity by advising a new Canadian equity long/short fund.
The Preservation Trust celebrates its 5th anniversary this month with a compounded annual return of 23.6% since inception. The long/short equity fund has a focus on Canadian securities and has been closed to new investors since early 2003.
However, JCClark, the fund's manager, will be opening additional capacity by advising a new fund designed specifically for institutional investors. The fund is due to be launched this summer.
The new fund is called Loyalist Capital and has been beta-tested with approximately USD 10 million of internal capital for the past 2 years, generating 11% per annum. Over the past 12 months, it produced a return of 15.7% with an annualized standard deviation of 5.2%.
Loyalist Capital will be offered by Barbados-based Alexander Ernst Ltd. to US and offshore institutions at a minimum of USD 5 million and will be capped at USD150 million.
John Clark, CEO of JCClark, said: "Our focus on both Canadian and US equities has produced solid returns over the past 5 years. Now larger investors have asked for a fund focused exclusively on Canadian equities."
Clark added: "The number of US long/short managers has grown dramatically over the past few years and the market is now becoming saturated. As a result, funds of funds and large institutional investors are now seeking a new source of alpha in the form of Canadian hedge funds."
Portfolio manager Colin Stewart said: "Canada is an excellent place to run a hedge fund. The market is comparable to Hong Kong or Germany, yet there are very few hedge funds here. This leads to pricing inefficiencies you just don't see in other markets."
"We are very sensitive to the liquidity constraints facing our Canadian strategy and would recommend the fund be closed before this point if we believed returns were being eroded by excess capital inflows." added Clark.
Background Note: JCClark is one of Canada's oldest and largest alternative investment managers. The firm was founded by John Clark, a veteran of the Canadian investment industry and a former Chairman of the Toronto Stock Exchange. The Preservation Trust and its parri passu managed accounts have approximately USD 225 million in assets. Alexander Ernst Ltd. is a Barbados-based fund manager.