WHAT ARE WE LOOKING FOR?
Eye-popping one-year returns.
Investors might be tempted by hedge funds, or funds using "alternative strategies" ranging from short selling to leverage and derivatives, to produce returns that don't correlate with the broader markets.
Those funds typically require a minimum investment of $25,000 to $150,000, and charge performance fees in addition to management fees.
Today we look at the alternative strategy funds with the highest one-year return over any period within the five years ended Sept. 30.
We then check to see how they have performed over one, three, five and 10 years. We exclude U.S.-dollar-denominated funds. We do, however, include the F-version of the funds targeted to clients of fee-based advisers. They do have a higher return than the A-version because of slightly lower fees.
SO WHAT DO WE TURN UP?
Hot short-term performance is no guarantee of strong long-term gains. In fact, some of the funds with the best one-year numbers have ended up being major dogs.
The DeltaOne Energy Fund LP posted the best one-year return - a spectacular 178.5 per cent for the year ended Sept. 30, 2005. Over the past five years, it has been a big loser with an annualized loss of 22 per cent.
The newer DeltaOne Strategy Energy, which posted an impressive one-year return of 139.1 per cent for the year ended Oct. 31, 2005, has fared somewhat better with a three-year annualized return of 20.5 per cent.
AGF Managed Futures Fund, which offers exposure to commodity markets through the use of derivatives, posted the second best one-year return - 177.1 per cent for the year ended Jan. 31, 2003. Over the past 10 years, however, it lost an annualized 21.7 per cent. Understandably, that fund is being shut down next week.
But there are gems.
Dynamic Power Hedge Fund-A run by Rohit Sehgal garnered the third-best one-year return - 157.6 per cent for the year ended April 30, 2006. The F-version of the fund, which has been around longer, was the top performer with a five-year compounded annual return of 61.8 per cent.
Top 20 Alternative Strategy funds with highest 1 year return within the past 5 years
|Best||Effective||As of Sept. 30, 2007|
|Fund name||(000s)||% return||best 1-yr rtn||% return||% return||% return||% return|
|DeltaOne Energy Fund LP||178.5||30-Sep-2005||-72.4||-44.0||-22.0|
|AGF Managed Futures||4,855||177.1||31-Jan-2003||-38.8||-29.3||-14.8||-21.7|
|Dynamic Power Hedge Fund - A||142,283||157.6||30-Apr-2006||87.8|
|Dynamic Power Hedge Fund - F||411,859||153.0||30-Apr-2006||85.3||68.5||61.8|
|DeltaOne Strategic Energy||139.1||31-Oct-2005||-5.0||20.5|
|King & Victoria Fund LP||114.8||29-Feb-2004||5.1||4.4||26.5|
|Sextant Strategic Opportunities F||110.5||31-Jan-2007||38.2|
|Horizons Northern Rivers Fund LP||102.3||31-Dec-2006||37.7||33.7|
|Salida Multi-Strategy Hedge||194,000||99.9||31-May-2006||59.7|
|Sextant Strategic Opportunities A||99.0||31-Jan-2007||46.8|
|Northern Rivers Innovation Fund LP||99,217||94.5||31-Mar-2004||35.4||35.0||34.9|
|Northern Rivers Innovation RSP||14,820||93.9||31-Dec-2006||39.0||33.0|
|Mountainview Cdn Opportunistic||83.8||30-Nov-2003||20.8||15.3|
|Epic Limited Partnership||138,900||82.2||29-Feb-2004||18.5||23.4||29.6|
|Arrow Epic Capital||93,116||81.1||29-Feb-2004||23.3||28.0||30.8|
|HBP Crude Oil Bear Plus-A||1,853||78.1||31-Jan-2007||-36.4|
|Arrow Distressed Securities||63,493||73.8||31-Dec-2004||30.1||20.2|
|Peregrine Investment Mgmt Fund L.P.||27,636||70.1||30-Apr-2006||49.4||41.3|
© 2007 The Globe and Mail. All rights reserved.
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