Hillsdale Investment Management announced today the launch of a Canadian Completion Equity strategy benchmarked to the recently introduced S&P/TSX completion index.
This active long-only strategy was developed specifically for institutional investors seeking an additional source of alpha in the Canadian small-mid cap universe to complement their large cap exposure.
“This new strategy provides institutional investors with a unique source of alpha in Canada, while adding diversification to their large cap portfolios”, says Chris Guthrie, president and CEO of Hillsdale. “We designed the Canadian Completion strategy immediately after the new index was introduced and we are thrilled to have received such a positive response from our first institutional investor. The strategy was seeded with a $100 million+ pension fund mandate.”
Targeting an information ratio of 1.0, the Hillsdale Canadian Completion strategy is designed to generate 600 basis points annualized excess returns with total risk equal to or less than the benchmark over a 24-month period. The strategy’s tracking error budget is also actively managed and capacity is limited to $400 million, Hillsdale says.
“The Canadian Completion strategy is a natural extension of our existing small and all-cap long-only offerings,” says Arun Kaul, principal & COO of Hillsdale. “We have more than 10 years of top decile performance managing small cap equity mandates and are pleased that the TSX has seen fit to separate this market segment from the larger TSX composite.”
“The new completion benchmark is great news for active Canadian equity managers,” says Guthrie. “With breadth of over 200 names and almost three times the liquidity of the existing TSX and BMO-NB small cap indices, the new index is fully investible and appropriate for institutional-size mandates. We hope the strategy will attract investors and consultants who have been frustrated in their search for small cap managers with sufficient capacity to make an impact on overall portfolio performance.”
In March 2007, Standard & Poor’s made significant adjustments to the S&P/TSX small cap Iidex methodology to create a more appropriate Canadian benchmark of small capitalization equities and income trusts. The S&P/TSX completion index is comprised of the constituents of the S&P/TSX composite index that are not in the S&P/TSX 60 index.
Today the TSX completion index represents almost 30% of the market capitalization and trading volume of the TSX composite index. The weighted average market cap of stocks in the completion index is $4.8 billion versus $35 billion for stocks in the TSX 60 index.
The return correlation of the TSX completion total return index to the TSX 60 total return index is 0.71 versus 0.65 of the TSX small cap total return index since February 2000.
Hillsdale introduces new Canadian small cap equity strategy
Institutional fund linked to S&P/TSX completion index
- By: IE Staff
- November 7, 2007 November 7, 2007
- 15:40