Neutral Fund
CALGARY (March 11, 2011) — Calgary-based McLean & Partners, with $1 billion under management, is offering two new investment products aimed at freeing clients from the squeeze between low interest rates and stock market volatility.
The McLean and Partners Alternative Income Class is one of two new funds designed to offer superior returns with significantly reduced risk to equity market downside.
“Today’s low interest rates in the bond market are essentially forcing investors into equities in search of returns above inflation,” says Brent McLean, President and CEO of McLean & Partners. “But after the crash of 2008-09, many investors are uncomfortable with the volatility in the stock market. The Alternative Income Class addresses both the low-interest issue of bonds and other fixed-income products, as well as the volatility the stock market.”
McLean & Partners has retained Vancouver-based Sherpa Asset Management as expert advisors on both new funds. The Sherpa team offers more than 90 years collective experience in options trading. They use proprietary trading strategies aimed at providing greater predictability of returns and stronger risk management.
The Alternative Income Class uses options trading to hedge away stock market risk and provide a targeted annual return of seven-to-ten per cent, including a quarterly capital gain distribution of five per cent per year.
“We take a mathematical view of offsetting risk,” says David Guarasci, head of Sherpa. “It’s an adherence to risk management that’s religious in nature.” Their track record has led major Canadian financial institutions to invest $160 million in Sherpa’s market neutral approach. That approach has now been twinned with the McLean & Partners Alternative Income Class.
As Guarasci explains it, the M&P Alternative Income Class buys selected dividend paying stocks and also sells options on a wide range of stocks to third parties seeking to hedge their investment risks. The fund earns premiums on the options it sells and these, together with dividends from stocks it holds, provide the seven-to-10-per-cent yield for the fund.
“We take a very active role in managing risk as our first priority,” Guarasci says “We target a zero correlation to stock markets and interest rates.” Guarasci says this marketneutral approach doesn’t take a position on the direction of the market or individual
stocks. It simply uses options to trade away downside risk, while capturing a portion of any gains.
McLean says the M&P Alternative Income Class offers an income stream that isn’t subject to low interest rates in the bond market, or to the volatility of the stock market.
He says the McLean & Partners Alternative Growth Fund will be more participatory in the upside of the market. It too will incorporate option strategies in the portfolio to generate return while providing protection against the downside. This fund is expected to deliver 10 to 12 per cent returns with about half the risk of the market.
“These two new offerings compliment our existing strategy very well and reinforce the absolute performance philosophy of McLean & Partners,” McLean says. The company’s existing three private pools are: McLean & Partners Global Growth; McLean & Partners International Equity and McLean & Partners Global Balanced, which all have dividend growth stocks as the core focus of their equity investments.
McLean & Partners Wealth Management provides portfolio management to high net worth investors. www.mcleanpartners.com
For more information, call 430-234-6103 or 1-888-665-0005
