* Targets risk-averse investors who want growth
* Says will underperform bull markets, but guard against
By Andrea Hopkins
TORONTO, Sept 10 AGF Management Ltd hopes to
lure Canadian investors back to its mutual fund lineup with a
new class of equity funds whose goal is simple: not to lose
With the 2008-09 financial crises still in the rear view
mirror, many Canadians have been reluctant to return to the
equity funds that were both the bread and butter of their
portfolios and cash cows for fund companies.
To woo those risk-averse investors back, AGF Chief Executive
Blake Goldring has teamed up with Boston-based F-Squared
Investments, a privately held investment manager, to launch the
AGF U.S. AlphaSector Class of funds, designed to cut the risk of
downturns while capturing gains in rising shares.
"How do you participate in the rising equity market without
being threatened by downdraft? That's a real concern for
people," said Goldring, whose fund company has faced a sea of
net redemptions since 2008 but hopes investors are ready to get
back in the game.
"Our focus is to avoid losses, particularly significant
losses. If we get the job done, we actually beat the S&P more
often than not, but our goal is never to actually beat the S&P,"
said F-Squared founder and President Howard Present.
The fund invests in exchange-traded funds representing the
primary sectors of the Standard & Poor's 500 Index, and reverts
to cash depending on signals from those sectors. It is a
quantitative model that allows for no subjective calls in the
event of a bull or bear market.
"They are playing into what has transpired since the
financial crisis - listening to people worried about the
downside, not just volatility," said Pauline Shum, an associate
professor of finance at the Schulich School of Business at York
University in Toronto.
Shum said she does not endorse the AGF product but knows the
hangover of risk-aversion that has dominated the investment
environment. So playing to that skittishness is not an unwise
"There is a niche there if you want to try to convince
people that have a shorter investment horizon and can't afford
to another downturn," she said.
And while it is uninspiring to define winning as losing
less, Goldring sees appeal for investors who say their priority
is "just don't lose my money."
Toronto financial adviser Jason Abbott said AGF is just one
in a crowd of fund companies trying to win over nervous buyers
with new products that offer downside protection.
"Everyone is risk averse, everyone is scared, but they still
need to be exposed to growth-type investments. I don't see this
as anything different. It's the flavor of the month," said
Abbott, a certified financial planner at WEALTHdesigns.ca Inc
and member of Advocis, the Financial Advisors Association of
"We all want the same thing - high returns with no risk."