Natcan switches focus to absolute return products

Date: Thursday, February 19, 2004

Natcan Investment Management has unveiled a strategy focusing on absolute return product management. Absolute return strategies are alternative investments that use unconventional investment vehicles. Their main advantage is that their gains are not correlated to those of traditional asset classes. As its name implies, this type of investment targets an absolute positive return, without factoring in market ups and downs. As such, it cannot be compared to any benchmark index. "Natcan is one of the first traditional portfolio management firms in Canada to develop such expertise, proof of its ability to offer products in response to new market realities. This type of investment vehicle is being introduced gradually throughout our industry and is increasingly attracting interest from institutional investors," said Sam Reda, president and COO at Natcan. Natcan says its investment structure combines bottom-up and top-down market analyses, and Investments are selected through a mix of quantitative and fundamental analyses. The structure focuses on three types of investments. An initial portion of the portfolio is earmarked for the selection of large- and mid-cap securities, while a second portion uses sector rotations and themes. In both cases, the market risk of the portfolio is neutralized through the use of short positions. The third portion of the portfolio is composed of a selection of small-cap securities, but in limited quantities. This last strategy consists in drawing on managers' best ideas, without any restrictions to a benchmark index. For this portion of the portfolio, safeguarding assets against market risk is left to the managers' discretion. Robert Beauregard, senior VP, small capitalization at Natcan, is responsible for this portion of the portfolio. In order to excel in this new niche, Natcan has hired two new experts to assist. Beauregard. Martin Roberge has been appointed portfolio manager and Benoit Mayer Godin, analyst. Over the past few years, Roberge and Godin have worked as a high-performance complementary team at National Bank Financial.