Tobam launches anti-benchmark Canadian equity UCITS fund
Quantitative asset manager Tobam has launched its existing Anti-Benchmark Canadian Equity strategy under the format of a UCITS IV fund.
The fund has been launched with seed funding from a major Canadian institutional investor.
The Anti-Benchmark Canada Equity Fund seeks to maximise diversification across the investment universe, as represented by the S&P/TSX Composite Equity index, by applying Tobam’s patented Maximum Diversification approach, bypassing the sector, country and style biases that more traditional allocation methods such as market-cap weighting can lead to.
By maximising diversification in the Canadian equities investment universe, where the index is highly concentrated in sectors including energy, materials and financials, the fund aims to deliver the full equity risk premium to investors. The fund aims to outperform the S&P/TSX equity cap-weighted benchmark by four to six per cent per annum over a market cycle, while at the same time delivering significantly less volatility (typically 30 per cent).
The fund mirrors the Anti-Benchmark Canada equity strategy that Tobam has run since April 2011. Since inception as of end of 1Q13, the Anti-Benchmark Canada Equity strategy has returned +13.7 per cent, outperforming the index (-5.6 per cent) by close to 10 per cent on an annualized basis. Over the same period, the strategy reduced volatility vs. the index by 33 per cent.
Christophe Roehri, head of business development with Tobam, says: “Tobam has been working extensively with leading Canadian institutional investors who are invested in the Anti-Benchmark strategy for global and emerging market equities. We have launched this fund in response to demand from both Canadian clients seeking an alternative to investing in their domestic market cap-weighted index and international clients seeking to improve the efficiency of their exposure to Canadian equities, often invested passively.”
Yves Choueifaty, president of Tobam, says: “Local and international investors in the Canadian market are coming to the realisation that buying the cap-weighted index is not a neutral position. On the contrary, the Canadian market-cap weighted index carries heavy biases and concentration risk that investors can avoid. The Anti-Benchmark approach makes particular sense in the Canadian market, as it allocates across risk factors and expands – meaningfully - the amount of diversification captured compared to a traditional index.”
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