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From time to time, Hillsdale is in the news. Our partners often speak at conferences or other events, and our accomplishments are covered in the financial media.

John Motherwell Speaks at SI Conference

Speaker: John Motherwell, Vice President, Institutional Marketing

Date: September 19, 2001

Venue: Metro Toronto Convention Centre, Toronto ON

Synopsis: At the Strategy Institute Conference on Creating and Marketing Hedge Funds, John Motherwell took part in a panel discussion focusing on the state of Canada’s Hedge Fund industry. Gary Ostoich, partner at McMillan Binch, chaired the panel and fellow industry panelists included Frank Belvedere of Montrusco Bolton Investments and Henry Kneis, President of Abria Financial Group.

The discussion began with the suggestion that given the volatility in the equity markets over the past year, Canadian institutions would be more willing to entertain the idea of adding alternative and absolute return strategies to their portfolios.

Talk then centered on which marketing channel exhibited the fastest growth potential. It was felt that the institutional community in Canada offered tremendous opportunity but that this was mitigated somewhat by the long sales cycle. The retail high net worth segment seemed to be the focus of most of the emerging managers in the room and how best to thrive in this sales channel was broached, along with partnerships to help in capital raising efforts. Some distribution concerns were tied with those of capacity issues and the degree to which managers in early development stages give up capacity and autonomy to gain asset growth. The consensus was that individual manager’s would continue to pursue marketing opportunities that are as varied and diverse as the manager themselves.

The most spirited discussion focused on whether to use external fund of funds managers or hire individual managers by utilizing in-house expertise to build a hedge fund portfolio from within. Certainly in Canada, it would appear that fund of funds, despite the higher fees and lower transparency, has appeal as an initial foray. But as Canadian managers such as Hillsdale begin to penetrate the institutional marketplace, acceptance of individual managers should grow, allocations to hedge funds as Canadian content will be possible and the costs associated with currency overlays would be eliminated. It was suggested that as direct investors, institutions will also have the ear of the manager and will be able to build risk analytics and monitoring capabilities incrementally as they become more familiar with the strategies. Though, to be successful, individual managers will need to enhance their risk budgeting capabilities at both the investment methodology and operational level.

Finally, new OSC regulations concerning changes towards an “accredited investor” rule and the impact this may have on individual managers were discussed. It was suggested that there are probably even fewer individuals that pass the new tests than those currently able to afford the current provincial thresholds. Although the new rules could benefit companies in start-up situations, it was noted that most firms would likely raise minimums higher than $150,000, once a critical mass was achieved.

Sponsor: Strategy Institute