what are we looking for?
The alpha dogs among Canadian hedge funds this year.
While most were also losers in 2008 amid a market crash, let's see if they managed to make money over the tumultuous 12 months ended in September.
We screened for the top 30 best-performing funds in the alternative strategies group for the first nine months of this year, and how they fared over the year ended Sept. 30.
Horizons BetaPro's bull and bear exchange-traded funds, U.S. dollar and duplicate versions were excluded. (Funds without a 2008 return and which did not file September results to Globe Investor in time are not included.)
what did we find?
Some have returned from the abyss over one year.
Among those in the red last year, AlphaNorth Partners Fund has returned a stellar 139 per cent so far this year. It's also in positive territory over the 12 months ended Sept. 30 with a 56-per-cent gain.
What makes this feat more significant to investors is that the fund can't reset its high-water mark annually like some competitors, says manager Steven Palmer. "So I started earning performance fees again once I made everybody's money back from the high-water mark of 2007."
Recent winners in his smaller-company hedge fund included Colossus Minerals Inc., a miner focused on Brazilian gold, and
AusPotash Corp., a private firm acquired by Sirius Exploration.
Salida Multi-Strategy Hedge, which shed 67 per cent last year, has gained 46 per cent over one year. Front Street Canadian Energy, which lost nearly 68 per cent in 2008, is up 38 per cent over one year.
This year's gains in the Front Street fund run by Normand Lamarche also stems from changing the focus from last year when it was known as Front Street Mining Opportunities. "The fund will overweight energy as we move through the cycle here," says Chris Fontana, director of sales at Front Street Capital Corp. "Norm sees better opportunity in the energy space than the base metals space."
Some, including Webb Canadian Performance Fund, are still under water over one year despite a 30-per-cent gain in the first nine months of this year. The fund shed nearly 27 per cent for the year ended Sept. 30.
Manager Derek Webb says he expects to bow out of the hedge fund space. There are plans to merge the hedge fund into his mutual fund, Webb Enhanced Growth. It's not surprising given that the mutual fund has gained nearly 57 per cent in the first nine months, and is up 17 per cent over the year ended Sept. 30. These returns will be an easier sell to investors.
|How alternative strategy funds have fared this year|
|(As of Sep 30)||Latest||(Sep 30)||% rtn||% returns (as of Sep 30)|
|Fund name Assets ($-mil)||MER||YTD % rtn||2008||1-yr||3-yr||5-yr||10-yr|
|Salida Multi-Strategy Hedge||94.7||145.4||-66.5||45.7||10.7|
|AlphaNorth Partners Fund Inc.||138.7||-53.3||55.8|
|Dynamic Power Hedge Fund-F||515.9||10.67||137.2||-71.8||-1.0||9.6||27.7|
|Front Street Canadian Energy||44.6||130.2||-67.7||38.2||1.8|
|Silvercreek Capital LP||5.0||74.7||28.1||62.1|
|Dynamic Power Emerging Markets||80.7||7.60||74.2||-74.3||-7.2||-7.1|
|Creststreet Energy Opportunities||64.5||-42.8||-21.4||11.6|
|Arrow U.S. Equity Income||29.3||63.7||-66.2||-2.9|
|Arrow Enso Global||28.1||59.6||-44.1||19.9||2.6||5.6|
|King & Victoria Fund LP||54.6||-24.5||31.7||7.2||5.9|
|Sprott Small Cap Hedge||26.0||2.48||52.2||-50.9||-0.1|
|Mackenzie Alternative Strategies||12.9||3.43||42.5||-57.4||-33.7||-13.4||-6.2|
|PH&N Absolute Return||147.8||1.42||41.6||1.5||48.0||21.8||18.3|
|Front Street Canadian Hedge Sr B1||133.4||39.4||-40.3||10.0||0.9||5.7|
|Barometer Long Short Equity||36.2||-20.3||21.9|
|Palos Income Fund LP||30.2||-31.7||-1.0||-0.7||5.5|
|Webb Canadian Performance Fund||29.5||-62.0||-26.5||-14.6|
|Arrow WF Asia||14.3||29.1||-46.0||3.8||2.0||6.7|
|Global Portfolio Solution LP Cl-F||28.2||-38.1||-5.5|
|Fiera N.A. Market Neutral II||27.4||10.0||32.2|
|Palos Capital Pool LP||27.0||-24.3||12.2||2.0|
|Northern Rivers Innovation RSP||5.5||26.6||-64.6||-28.3||-13.5||1.9|
|Northern Rivers Global Energy LP||4.3||23.9||-53.5||-21.3||-6.0|
|Palos Equity Income RRSP||22.6||-23.6||-1.7|
|Dynamic Income Opportunities-F||4.28||21.1||-25.3||3.5||4.9|
|MSCI World ($ Cdn)||9.9||-26.1||-0.5||-5.1||0.7||-1.8|
|S&P 500 Composite ($ Cdn)||2.5||-23.8||-8.3||-8.7||-4.3||-5.0|
|S&P/TSX Composite Index||26.8||-35.0||-3.0||-1.0||5.6||5.1|
|S&P/TSX Total Return||30.0||-33.0||0.5||1.9||8.3||7.3|
|S&P/TSX Venture Composite||60.2||-71.9||-9.7||-19.8||-4.8|
|Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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