BayStreetDirect Launches New Hedge Fund Platform For Canadian Investors

by Philip Morton, InvestorsOffshore.com

11 April 2001

Toronto-based online broker BayStreetDirect Inc (BSD) recently announced that it is launching a line of hedge funds, taking advantage of the fact the hedge funds are becoming increasingly popular with Canadian retail investors. BSD said that it is adding hedge funds to its product range "to provide its members greater access and flexibility to tailored investment strategies."

Hedge funds are usually sold as private placements to sophisticated investors in Canada. The minimum thresholds are the same as for regular private placements, typically C$150,000 (in Ontario for example) or $97,000 in most provinces. The exception is British Columbia where the minimum is just C$25,000.

BSD's first offering is the Excalibur Harvest Canadian Fund. The fund is a premium-yield fixed income fund that owns a core portfolio of short-term Canadian Goverment Treasury Bills and bonds and a yield enhancement trading programme that invests in put and call option credit spreads on the US Treasury Bond Futures.

A statement from BSD said of the Excalibur Fund: 'The fund's objective is to increase investor principal every 12 to 14 months at double-digit rates; generate positive returns regardless of market direction; and earn high levels of capital appreciation with a maximum pre-determined risk level.' It added: 'We selected this fund as our first hedge fund offering as it employs a very low risk strategy and yet can still deliver double digit returns.'

Dan Gosselin, senior vice president of capital markets at BSD, commented that Canada is typically three of four years behind the US in investor behaviour, so the time is evidently ripe for a hedge fund offering from BSD, which decided to move into the arena following numerous conversations with hedge funds looking to attract individual investors. Of the 20 to 25 hedge funds BSD estimates are operating in Canada, the company has had talks with around six of them and Mr Gosselin expects an unnamed second hedge fund to sign on to the platform shortly. He said: 'Our intention is to build on our reputation for one-stop shopping.'

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