Innocap Investment Management Inc., a subsidiary of National Bank of Canada and BNP Paribas, has announced they have signed the first license issued by MSCI to use the MSCI HF Composite Index as a basis for funds that synthetically track the performance of the index.

This license agreement completes the roll out of the Innocap family of replication products that was launched in July 2007. Salto MSCI HF Composite Synthetic Tracker aims to minimize the tracking error with the reference index while Verso MSCI HF Composite Short Synthetic Tracker offers a short version for hedging purposes.

Dosalto MSCI HF Composite Leveraged Synthetic Tracker will also be launched soon soon to offer a 2X-leveraged version of Salto. All products are offered to accredited institutional investors through a Malta based vehicle (Sub-Funds of NBCG Fund SICAV p.l.c.), for which Innocap acts as investment advisor.

“Innocap has developed what we believe to be the most advanced algorithm currently available on the market to track HF indices using liquid factors,” said Martin Gagnon, co-CEO of the company. “We use a sophisticated filter specifically designed for tracking complex trajectories, allowing the products to be very robust and highly adaptable to changes in market conditions. Moreover, the algorithm handles more than 15 factors and allows non-linear exposure dynamics.”

These tracker funds are offered for a very low management fee, with daily NAV calculation as well as daily liquidity and transparency to the underlying exposure for investors.