Alternative strategies have long been used by hedge funds, but new regulatory changes will provide retail funds with more options use to them.
With the new regulatory changes, fund managers can leverage strategies traditionally used by hedge funds in the new alternative funds framework. This is anticipated to increase the number of available funds to investors.
New regulations bring benefits for investors, but also challenges as more asset managers enter the market.
Using inexperienced alternative managers can introduce a new risk to portfolios.
Alternative FundsA type of investment fund using alternative investing strategies similar to hedge funds but with daily liquidity.
Source: Bloomberg L.P., Picton Mahoney Asset Management ("PMAM") Research. Based on blended, monthly historical index data from January 1990 to September 2018 (the "Period"). The information above has been provided as a general source of information for illustrative purposes only. It is subject to changes and should not be construed as investment advice, should not be relied upon for any investment decision, and is not a rceommendation, solicitation or offering of any security in any jurisdiction. Stocks are represented by the annualized, weighted average monthly returns of the S&P/TSX Composite Index (Total Return, CAD) throughout the Period multiplied by the various weights shown on each point of the efficient frontier. Bonds are represented by the annualized, weighted average monthly returns of the ICE BofAML Canada Broad Bond Index Total Return in CAD throughout the Period multiplied by the various weights shown on each point of the efficient frontier. Uncorrelated Alternative Investment is represented by the annualized, weighted average monthly returns of the HFRI Fund Weighted Composite Index Total Return in CAD throughout the Period multiplied by the various weights shown on each point of the efficient frontier. The performance information provided herein represents back-tested performance, based on actual index data during the Period. Back-tested performance is hypothetical (it does not reflect trading in actual accounts) and is based on the historical returns of the indices, investment classes and various assumptions of past and future events. Back-tested performance does not represent actual performance and should not be interpreted as an indication of such performance. Actual performance for a fund of client may differ materially from hypothetical performance. Back-tested performance results have certain inherent limitations. Unlike an actual performance record, modeled or hypothetical performance results involve certain assumptions, which may or may not be correct. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular investment strategy. One of the limitations of hypothetical performance results is that they are generally achieved through the retroactive application of a model that was prepared with the benefit of hindsight. As a result, the models theoretically may be changed from time to time and the effect on the performance results could be either favourable or unfavourable. Modeled or hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the economy or markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, all of which can adversely affect trading results. In addition, modeled or hypothetical performance results do not represent the results of actual trading and may over- or under-compensate for the impact, if any, of certain material market or economic factors, such as lack of liquidity. The back-tested performance provided herein is gross of fees and does not include trading costs, management fees, implementation shortfalls, taxes or other fees, expenses and costs which investors in a fund or account would be subject to. The models used and the opinions, estimates and projections contained in this document are those of PMAM as of the date of publication. The information contained in this report has been obtained from sources believed reliable however the accuracy and/or completeness of the information is not guaranteed by Picton Mahoney Asset Management (“PMAM”), nor does PMAM assume any responsibility or liability whatsoever arising from its use.