Balsam Hedge Funds today announced the launch of its first product, the Balsam Canadian Hedge Fund Limited Partnership, one of the few Canadian-managed, single manager/single strategy absolute return funds available to Canadian investors.

The fund, which is available to institutional and retail investors, is designed to generate absolute returns — a positive return each year, regardless of the direction of the broader markets and the performance of underlying market indices.

“We strongly believe this product fills a void in the Canadian hedge fund market for a risk-controlled alternative investment that is non-leveraged, redeemable daily like a mutual fund, highly transparent and adheres to a single strategy,” says John O’Donohue, president and CEO of Balsam Hedge Funds. The Toronto-based firm was established in 2001.

“The cornerstone of Balsam is risk control and our management team and advisors have designed a company and product centred on best practices for risk management. We have implemented strict guidelines developed by Deloitte & Touche, which include a prohibition on the use of leverage, increased disclosure to investors, and the use of a primary broker to consolidate the investment activity of the fund,” adds O’Donohue.

The fund is managed using a long/short equity strategy. The portfolio manager holds long equity positions in companies whose financial prospects are good and short equity positions in companies whose financial outlook is judged to be negative. These two positions are held in one portfolio simultaneously. The manager buys and sells positions with the objective of capturing real rates of return.

Unlike many hedge funds, the fund does not use leverage. Specifically, it will not borrow money to invest.

The fund’s investment manager is Leon Frazer & Associates Inc. Based in Toronto, the firm currently has 15 senior portfolio managers on its investment team, including senior investment managers who have successfully managed private investment portfolios with a “short bias” for the past several years.

“For many years our disciplined investment approach has enabled us to capitalize on either rising or falling markets and deliver consistent, strong results to our private clients and institutional accounts. The Balsam Canadian Hedge Fund is the ideal vehicle through which we can offer our services to a broader investment audience,” says said William (Bill) Tynkaluk, President of Leon Frazer & Associates Inc

Balsam Capital Management Ltd. is the general partner of the fund. BMO Nesbitt Burns Inc. is acting as custodian of the assets of the fund and as primary broker.