Why invest in the Fund?
Small-cap equities are the best performing asset class over the long term. The Fund offers a diversified exposure to micro/small-cap Canadian equities.
What are the Fund's goals?
The Fund’s goals are to maximize returns over the long term and align investors’ interest with the managers of the Fund by investing primarily in Canadian micro/small-cap equities with a long bias.
Who manages the Fund?
The AlphaNorth Partners Fund is managed by Steve Palmer and Joey Javier, who have worked together as a team since 1998 managing small-cap portfolios. They managed an award-winning small-cap equity fund at one of the largest investment firms in North America that had an annualized return of 35.8% over their nine-year term, significantly beating all relevant benchmarks. Founding AlphaNorth Asset Management in 2007, Steve and Joey launched the AlphaNorth Partners Fund, which is a two-time first place winner for best three-year return at the Canadian Hedge Fund Awards. The Fund recently won second place for best one-year return at the 2020 Canadian Hedge Fund Awards. Steve Palmer is the CIO and a Chartered Financial Analyst (CFA). Joey is the trader and is a Chartered Investment Manager (CIM).
Is the Fund achieving its goal?
Yes! Since inception in 2007, the AlphaNorth Partners Fund has generated a return of 237%, significantly outperforming the TSX Venture index, which has generated a loss of 68%. The Fund also outperformed the TSX Total Return index with an annualized return of 9.7% vs. 5.1% for the TSX. All returns are as at December 31, 2020. A significant portion of the Fund assets are held by the principals of AlphaNorth (approximately 50% as at December 31, 2020). The high-water mark (HWM) does not reset. Investors do not pay a performance fee unless they make money.
Why now?
The Canadian junior market has gone though a long period of underperformance while large-cap indices have reached new all-time highs. Historically, small-cap equities have outperformed all other asset classes over the long term. We believe that we are still early in the emerging bull market for the TSX Venture index.
Why take the risk?
What defines risk for investment funds? Volatility. Since inception, the AlphaNorth Partners Fund has had a beta of 1.5x that of the TSX and 0.9x that of the TSX Venture index. Despite high volatility, long-term returns are significantly in excess of these indices. Small caps are the best performing asset class over the long term, are often negatively correlated with broader markets and should be a component of a diversified portfolio. Our view of risk is that over the long term, it is not so much a matter of how you get there but, when you arrive, you have far more wealth than you would with a lower volatility strategy. Over the long term, there is risk also of not having enough capital to meet your retirement or other goals.
How can I purchase the AlphaNorth Partners Fund?
Investors can purchase directly through AlphaNorth with no fees. Investments can also be made through many brokerage firms. Please contact AlphaNorth for current availability.
Who can invest in the AlphaNorth Partners Fund?
The Fund is for accredited investors. Generally, individuals with an annual income of over $200,000, or investment assets (excluding home) of over $1 million qualify as accredited investors. Please refer to the Offering Memorandum for additional detail.
What is the minimum investment?
The minimum investment is $150,000 with subsequent investments of $10,000.
What are the fees?
2% Management Fee; 20% Performance Fee
The AlphaNorth Partners Fund is a specialized product which requires higher management interaction than typical equity funds. The investments considered typically have no analyst coverage to develop research around and are often inefficiently priced. AlphaNorth independently performs all the research, analysis and ongoing monitoring of investments.
Who are the service providers for the AlphaNorth Partners Fund?
Harmonic Canada provides administrative services to the Fund. NBCN Inc. acts as prime broker and custodian of the Fund’s assets. The auditor of the Fund is KPMG LLP, Toronto, Ontario.
Can the AlphaNorth Partners Fund be purchased in RSP and TFSA accounts?
Yes, when purchased through a brokerage account.
What are the FundSERV codes?
Class A share: AAM100; Class D shares: AAM200
What are the differences between Class A and D shares?
Class A shares are for direct subscribers; have a 2% management fee and no service fee.
Class D shares are for investors through brokerage accounts. These shares have a 2.5% management fee from which 1% is paid to the brokerage firm as a service fee.
What are the redemption terms?
Investments can be redeemed on a monthly basis with 90 days notice. For Class A shares, there is no early redemption fee or lock-up period. For Class D shares, there is no lock-up period, but there is an early redemption fee of 3% in the first year and 1.5% in the second year.
What is the Management Expense Ratio (MER) of the Fund?
In addition to the management fee, which includes the 1% service fee to investment advisors, the Fund pays for legal, audit, FundSERV, Fundata and administration services. Those additional fees amount to approximately 16BP on an annualized basis as at December 31, 2020.
What reporting do investors receive?
Trade Confirmation; Monthly & Annual Account Statements; Semi (unaudited) & Annual (audited) Financials; and Monthly Fund Commentary.