The Arrow High Yield Fund is scheduled to close to new investment on June 30, Arrow Hedge Partners Inc. said Tuesday. The proposed closing is intended to cap the fund at the target asset level of $500 million.

The fund is designed to appeal to accredited investors who are moderately conservative and seek monthly income with low volatility.

The investment objective of the fund is to achieve a high level of income with the potential for capital gains, while maintaining modest volatility.

The fund invests primarily in Canadian high-yield corporate bond issuers and is able to create long positions in the debt of a company and a short position in the equity of a company.

“Over the long term the fund has outperformed the market,” says Barry Allan, portfolio manager & CEO of Toronto based Marret Asset Management Inc. “And at the same time we’ve taken a lot less risk and produced far less volatile returns.”

“We have determined that it is in the best interest of our investors to cap the fund at the target of $500 million,” says Mark Purdy, managing director and chief investment officer of Arrow Hedge Partners Inc.

“Over the past two-years the fund has grown about 40%, within this capacity target we are confident that we can continue to produce solid risk adjusted returns.”

Arrow says the target of $500 million is much larger than any of the other retail credit hedge funds in Canada and the strategy itself is not being closed. Arrow feels that this is an appropriate size for their managed account to produce the highest returns for clients invested in the fund.

“Arrow focused mainly on credit in 2009,” claims Purdy. He goes on to add, “It was a mainly beta driven call that worked very well with credit spreads falling fast from crisis levels. We are generally constructive on credit in 2010 but managers will have to be more nimble and that could favour a more trading-oriented approach, which suits our current credit allocations.”

Headquartered in Toronto, Arrow Hedge Partners Inc. is an investment management company that specializes in providing access to high-quality hedge fund managers and multi-manager funds of funds to a wide range of clients, including family offices, institutions, pension funds and high net-worth individuals. It currently manages over$800 million on behalf of high net-worth and institutional investors globally.

IE