Picton Mahoney launches multi-strategy liquid alternatives ETF on TSX

May 12th, 2022 | By | Category: Alternatives / Multi-Asset

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Picton Mahoney Asset Management has expanded its suite of liquid alternatives ETFs with a new fund providing exposure to multiple unconventional strategies within a single wrapper.

David Picton, President & Portfolio Manager at Picton Mahoney.

David Picton, President and CEO at Picton Mahoney.

The Picton Mahoney Fortified Alpha Alternative Fund (PFAA CN) has been listed on the Toronto Stock Exchange with a management fee of 0.95%.

Alternative investments can offer diversification benefits when added to conventional stock/bond portfolios, helping to improve risk-adjusted returns.

Liquid alternatives – alternative investment strategies made available to the retail market – come with many benefits including easier entry points in terms of initial investment, regulated transparency and reporting requirements, and limits on the amount of total leverage used.

Investment approach

Picton Mahoney’s latest ETF aims to deliver long-term capital appreciation with an attractive risk-adjusted rate of return by combining the best ideas across the firm’s equity, fixed income, arbitrage, and quantitative teams.

The fund may invest across various financial markets including developed market equities, emerging market equities, global government and corporate bonds, foreign exchange, commodities, and volatility.

The specific strategies deployed by the ETF may include market-neutral, relative value, event-driven (mergers, divestitures, and restructuring), arbitrage (fixed income sectors, yield, credit, capital structure, and convertible), private debt offerings, managed commodity futures, and option spreads.

Similar to all of Picton Mahoney’s ETFs, the fund incorporates the firm’s proprietary ‘Fortified Investing’ approach – a rules-based risk management technique that seeks to mitigate downside exposure while building long-term growth, regardless of market conditions.

The ETF comes with a management fee of 0.95%. Additionally, the fund will charge a performance fee of 20% on performance above its benchmark while considering a 2% hurdle rate and a perpetual high watermark.

David Picton, President and CEO of Picton Mahoney Asset Management, commented: “Over the past 30 years, traditional investments in equity and fixed income markets have served investors well. Going forward, however, we believe that these investments will likely generate lower returns than investors have come to expect given the ‘pull forward’ of returns over the past few years along with the need for central bankers to remove excess accommodation from the financial system.

“Our latest alternative fund offering is designed for investors who are seeking an investment that will diversify more traditional stock and bond portfolios. It provides exposure to equity market neutral, credit, and merger arbitrage strategies in a capital-efficient manner. The fund aims to generate uncorrelated returns that can also compete with returns available in equity markets.”

Picton Mahoney offers a further six ETFs within its liquid alternatives suite:

Picton Mahoney Fortified Active Extension Alternative Fund (PFAE CN)
Picton Mahoney Fortified Market Neutral Alternative Fund (PFMN CN)
Picton Mahoney Fortified Multi-Strategy Alternative Fund (PFMS CN)
Picton Mahoney Fortified Income Alternative Fund (PFIA CN)
Picton Mahoney Fortified Long Short Alternative Fund (PFLS CN)
Picton Mahoney Fortified Special Situations Alternative Fund (PFSS CN)

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