Hedge Funds Canada
Canadian Hedge Fund Guide
Below is a short narrative on hedge funds in Canada followed by a dozen links to additional articles and resources on the Canadian hedge fund industry. The hedge fund industry in Canada is relatively small, with fewer hedge funds and fewer assets than those in major financial centers such as those in the UK and the US. Only 4% have assets of more than $5 billion and 30% have assets between $10 million and $49 million. This is in comparison to 21% and 10%, respectively, worldwide. The hedge fund industry in Canada is also relatively new with only 17% of hedge funds having been in existence for more than a decade whereas more than 33% of hedge funds worldwide have been in existence for at least ten years. In its early stages, Canadian hedge funds were limited to structured notes and fund of hedge funds that were guaranteed by many international banks. However, over the course of the last 13 years, more than 200 single strategy hedge fund emerged with more than $15 billion under management. In addition, a large amount of the funding from hedge funds is obtained from partners and employees. They account for 25% of the funds which is much higher than the 8% that is garnered in this fashion on a global level. Canadian hedge funds are also more likely to be driven by derivatives based strategies. A recent survey, by NBCN Prime Brokerage Services, suggested that 80% of hedge fund managers in Canada attempted to raise capital by use of futures and commodities and 40% uses forwards, swaps and options. This is in comparison to 22% on a global level. These facts, along with stringent Canadian regulations and above average returns lead to the belief that the Canadian hedge fund industry will see a period of exponential growth.
A major blot on the Canadian hedge fund industry came in the form of the Portus Alternative Asset Management scandal. In 2005, it became apparent that the hedge fund had not invested approximately $52.8 million that it had received from its customers and that over $17 million was unaccounted for. The Ontario Superior Court filed a law suit against the hedge fund manager in March 2005 and seized all of its assets. Boaz Manor, Cofounder of the fund, misappropriated funds using offshore accounts in Italy , the Cayman Islands and the Bahamas, before fleeing to Israel after the funds assets were seized.
Canadian Hedge Fund Articles
- Hedge fund reader summarizes Canada's hedge fund industry vs. rest of the world:http://www.hedgefundreader.com/2007/01/canadas_hedge_f.html
- The Portus scandal - http://www.bloomberg.com/apps/news?pid=10000082&sid=a_1CPFCpJ5vI&refer=canada
- Discusses the idea of allowing investors who are not accredited to invest in hedge funds:http://www.tfmsl.ca/#
- Website devoted to Canadian hedge funds: http://www.canadianhedgewatch.com/content/home/
- Speculates that Toronto could take on New York as the hedge fund center: http://findarticles.com/p/articles/mi_hb4798/is_200611/ai_n17420448
- Hedge fund managers directory: http://ca.dir.yahoo.com/Business_and_Economy/Shopping_and_Services/Financial_Services/Investment_Services/Mutual_Funds/Hedge_Funds/
- Special report on Canadahttp://www.incisivemedia.com/hfr/specialreport/canada.pdf
- Report on hedge funds in Canada: http://www.aima-canada.org/doc_bin/AIMA%20Canada%20Senate%20of%20Canada%20Briefing.pdf
- Another report on hedge funds market in Canada: http://www.aima-canada.org/doc_bin/AIMA_Primer.pdf
- Report on modernizing securities legislation in Canada:http://www.tfmsl.ca/#
- Canadian hedge fund conference: http://www.terrapinn.com/2008/hfwcanada/
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