Arrow launches Curvature Market Neutral Fund

Arrow Hedge Partners Inc. is launching a new fund that targets investors seeking a market-neutral strategy with above-average growth and moderate volatility.

Arrow Curvature Market Neutral Fund will invest in securities of small- and mid-cap companies, primarily in Canada and the United States.

The fund’s investment objective is to remain market neutral while maximizing absolute return on investments, with less than half the volatility of broad equity markets.

The fund is advised by James Hodgins of CHS Asset Management Inc., and is now available for purchase on a stand-alone basis by accredited investors.

“This fund performs best in down markets or markets with normal to high levels of volatility and employs a proven proprietary, model-driven strategy developed and refined from over a decade of institutional investing and trading,” says Mark Purdy, managing director and chief investment officer of Toronto-based Arrow Hedge Partners.

The fund manager invests using three distinct, synergistic sub-strategies. The first strategy is a research-intensive fundamental strategy that studies and analyzes the change in factors affecting the value of a stock. These changes may be macroeconomic in nature or company specific. The second strategy is a model-driven systematic strategy designed to focus on company-specific changes so as to identify profitable opportunities given the macroeconomic backdrop. Lastly, the fund uses an event-driven strategy that captures arbitrage opportunities created as a result of mergers, restructurings and other corporate events.

“We have entered a period of higher volatility,” claims Purdy. He goes on to add, “It is important to invest your capital with proven managers who have protected on the downside and generated positive returns in varying market conditions.”

“The key to this process is that it provides a return stream that is typically not correlated with equity markets or traditional relative value hedge fund strategies,” says James Hodgins, chief investment officer of CHS Asset Management Inc. “Further, it provides our investors with protection against systemic declines in risk assets as seen in 2007-2008 and which we have seen recently.”