The majority of the investments of our current clients are distributed between our three pooled funds, HFI TAP, HFI Growth and HFI Balance.

The move to pooled funds has provided economies of scale by enabling us to trade only two large pools of assets instead of many individual accounts. Pooling our client assets also made it possible to increase the number of positions we hold in our investment strategies. In addition to the reduction in risk afforded by such diversification, this made it practical for us to begin trading individual stocks, income trusts and bonds as well as ETFs for our clients. 

One of our big advantages is our size. We are flexible enough that we can normally liquidate an entire position in a day without significantly moving the market price of that security. This enables us to utilize strategies large mutual fund companies, pension managers and portfolio managers are not able to use.

The following excerpts from an article make a very practical point about the dangers of being too big. This is particularly interesting if you keep in mind that it was written 15 years ago when the amount of money in mutual funds and large pension funds was much less than it is today:

“Alex Christ said that Mackenzie’s flagship funds were just plain too big.  He and his co-managers had seen the [1990 bear] market falling, all right, but they had determined that if they sacrificed many of their stock positions, they would not be able to get back in on the way up.  We decided, he said to the assembled brokers, to wait it out . . . 

“With the small concentrated Canadian stock market, it is no wonder that a wholesale retreat from a dropping market by Mackenzie would drive prices down - just as a rush into a rising market would push prices up.  In past bear markets, however, Mackenzie has been nimble enough to slip out in time to avoid poor performance numbers. The day of the Oct 1987 crash, Mackenzie’s Horizon fund was 70% in cash.  In the 1973 market crumble, it [then called Industrial Growth Fund] was 99% in cash. During last year’s decline, the decision to stay in radically departed from the past . . .

“[their funds’] uncharacteristically poor performance during the past two years [1989 & 1990] is principally because Alex Christ called the market wrong.  He evidently believed the recession would be mild and short.  Alex Christ loaded up on industrial products and base metals in anticipation of a capital spending boom in the ‘90s.”  

(Page 12-13, Financial Times of Canada, 4 Mar 91)

These quotes show that portfolio managers of larger funds have little choice but to buy the market and hold it. This isn't always the best thing to do with one's money! It is also clear from this article that Mackenzie was apparently in the wrong sectors for two years. In nearly all instances HFI can buy or sell a position in one day.

To provide the best possible portfolio management for our clients, we kicked almost every tire and turned over every rock we found in order to provide the most efficiently structured pooled funds. We chose Qtrade Investor Inc. (Qtrade) as the deposit taker and online broker, Canadian Western Trust (CWT) as the custodian and Investment Administration Services (IAS) as our back office record keeper. This structure enables our pooled funds to be held in each client’s Qtrade account(s) with ultimate flexibility, which also allows holding DSC funds, bonds, hedge funds or special stocks in the same Qtrade account.

Since launching our pooled funds on April 29, 2005, we have stepped up the pace of our research and have developed new weekly consensus indicators covering 15 sectors and indices. We are in position to take full advantage of the research we have done, and are looking forward to making even better returns going forward for our clients.

Click here to view our Historical Performance.