Leeward Offshore Canadian Income Fund has launched the Leeward Offshore Income Trust Fund, which will invest solely in Canadian income trusts.
Leeward Hedge Funds Inc (Leeward) has been appointed investment advisor to the new fund, the sixth for which Leeward provides investment advisory services.
The Cayman Islands registered fund will utilize leverage and its objective is to maintain stable, semi-annual cash distributions with capital appreciation.
"Since the late 1990s, Canadian's have benefited from investing in this unique high-yield asset class," says Brendan Kyne, Chairman and Chief Investment Officer at Leeward. "We are delighted to be involved with this fund as it enables international investors with an opportunity to participate in Canada's robust income trust market."
The fund will invest in a diversified portfolio of securities of Canadian income trusts from the following sectors:
• Oil & Gas Producer & Exploration Trusts
• Commodity Based Royalty Trusts
• Oil & Gas Service Trusts
• Pipeline & Power Generation Trusts
• Business and Industrial Trusts
• Real Estate Investment Trusts
The fund will be denominated in US dollars and will be managed by the Leeward Investment Team, which is led by Kyne whose eighteen- ear career has focused on the North American market. Using independent fundamental research, the fund will build a leveraged portfolio of income trusts and seek out investment opportunities in income trusts that are delivering stable cash flows from their underlying business.
Background notes: Introduced in the late 1990s, income trusts are a unique Canadian asset class. The structure involves the conversion of corporation to a trust structure that permits the entity to pay out regular cash distributions to shareholders. This has the combined effect of providing yield-generating vehicle to investors, which at the same time dramatically reducing the tax burden of the trusts. Because of this, income trusts generally trade at a premium to traditional corporate structures within the same industry. There are currently 224 Toronto Stock Exchange-traded income trusts.
Leeward Hedge Funds Inc, a private company based in Toronto, Canada, is the investment advisor to six hedge funds and several managed accounts. As at September 30, 2005 Leeward Hedge Funds Inc. has over USD 250 million in assets under management primarily for institutions, fund of funds and high net worth individuals.
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