January 2012
Investment Objective
The Alternative Income Fund provides superior risk adjusted returns by delivering on two key objectives:
1. Preserve capital;
2. Generate yield and capital gains in varying market conditions.
Strategy
McLean & Partners has partnered with Sherpa Asset Management (who specialize in alternative strategies) to offer this fund to our clients who are looking to diversify their portfolios. The fund invests in blue chip North American equities, listed primarily on the S&P 500 and S&P/TSX 60 Index. It also focuses on overlay option strategies and selects short positions to generate extra yield as well as to provide portfolio protection during market downturns.
Highlights
- Quarterly distributions of 1.25% (5% annually) taxed primarily as capital gains income
- Fund aims to generate returns in rising, flat and declining markets (annual target returns 7-9%)
- Fund is designed to have minimal drawdowns and low volatility (expected volatility of 3-6% annually)
- Fund hedges US Dollar exposure and maintains a US currency weighting in the 0-10% range
Monthly Performance
| 2012 | Jan-12 | Feb-12 | Mar-12 | Apr-12 | May-12 | Jun-12 | Jul-12 | Aug-12 | Sept-12 | Oct-12 | Nov-12 | Dec-12 | YTD | Inception** |
| McLean & Partners* | 0.49% | 0.49% | 7.30% | |||||||||||
| S&P 500*** | 3.21% | 3.21% | 21.39% | |||||||||||
| TSX*** | 4.37% | 4.37% | 12.55% | |||||||||||
| Dex Universe*** | 0.35% | 0.35% | 14.02% |
| 2011 | Jan-11 | Feb-11 | Mar-11 | Apr-11 | May-11 | Jun-11 | Jul-11 | Aug-11 | Sept-11 | Oct-11 | Nov-11 | Dec-11 | YTD |
| McLean & Partners* | 0.48% | 0.03% | 0.79% | 0.64% | 1.30% | 0.57% | -1.00% | -4.52% | -1.19% | 1.26% | 0.93% | 0.44% | -0.41% |
| S&P 500*** | 3.16% | -0.26% | 1.20% | 0.80% | 0.98% | -3.88% | -2.84% | -3.08% | 0.30% | 6.15% | 2.64% | 1.32% | 4.40% |
| TSX*** | 0.99% | 3.21% | 0.21% | -1.19% | -0.87% | -1.38% | -2.50% | -1.21% | -8.18% | 5.61% | 0.92% | -0.96% | -8.71% |
| Dex Universe*** | -0.64% | 0.23% | 0.06% | 1.08% | 1.50% | -0.32% | 2.19% | 1.33% | 1.27% | -0.37% | -0.09% | 1.50% | 9.37% |
| 2010 | Jan-10 | Feb-10 | Mar-10 | Apr-10 | May-10 | Jun-10 | Jul-10 | Aug-10 | Sept-10 | Oct-10 | Nov-10 | Dec-10 | 2010** |
| McLean & Partners* | 0.27% | 2.42% | 1.46% | 1.12% | 0.88% | 0.22% | 0.63% | 7.21% | |||||
| S&P 500*** | -2.38% | 3.98% | -0.95% | 3.60% | 2.96% | 1.05% | 2.21% | 12.66% | |||||
| TSX*** | -2.13% | 3.96% | 1.90% | 3.30% | 2.68% | 2.46% | 2.52% | 18.12% | |||||
| Dex Universe*** | 1.43% | 0.64% | 1.61% | 0.89% | 0.52% | -1.15% | 0.50% | 3.89% |
*For Class A Master Series Sherpa Market Neutral Income Fund, gross of fees and expenses
**Since June 2010
***Source: Bloomberg in CAD Pricing
- Atttractive annual income distribution of 5%
- Expected returns are more attractive than most fixed income investments and comparable to historical equity investment returns
- Expected volatility is lower than equity investments, and similar to or lower than investment grade debt
- Low correlation to other asset classes provides portfolio diversification
- Options strategies provide consistent and replicable alpha generation and capital preservation
- Dynamic hedging approach ensures exposure levels remain in line with fund mandate
| Portfolio Manager: David Guarasci, CFA - Sherpa Asset Management |
| Legal Structure: Unit Trust |
| Redemption: Monthly |
| Unit Pricing: CAD |
| Prime Broker: Morgan Stanley, Royal Bank of Canada |
| Fund Administor: CIBC Mellon |
| Auditor: KPMG LLP |
| Legal: Norton Rose Group |
If you are interested in learning more about this fund, please contact
Russ MacKay at (403) 234-6103 or rmackay@mcleanpartners.com
Disclaimer: McLean & Partners provides independent research and advice to its clients on a fee for service basis. The company is not engaged in any investment banking, underwriting, consulting or financial services activities on behalf of any companies. McLean & Partners’ research reports are for the sole purpose of managing client portfolios on a managed and non-managed basis. The company may engage in proprietary trading to invest surplus corporate cash balances. The opinions expressed herein are those of the author and do not necessarily represent those of McLean & Partners Wealth Management Ltd. The information contained in this report has been obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. McLean & Partners Wealth Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
