NIAGARA CAPITAL
PARTNERS LTD.
LAUNCHES
FUTURES-FOCUSED
FUND AFTER 4
YEAR INCUBATION
PERIOD
February 23,
2011. Toronto
After 4 years of
incubating the
strategy in the
form of a
Canadian LP,
Niagara Capital
Partners Ltd. is
making its
Niagara
Discovery Fund
Ltd. available
to non-Canadian
and non-U.S.
investors and
the Canadian LP,
the Niagara
Discovery Fund
more widely
available to
Canadian
investors. A
slow, organic
approach is in
keeping with the
firm’s culture.
The fund is the
creation of
Niagara CIO
David Rothberg
and Albert
Friedberg, CIO
of Friedberg
Mercantile Group
Ltd. (FMGL) and
the PM of the
Friedberg Global
Macro Hedge Fund
Ltd. Rothberg
has worked at
FMGL since the
1970s as an
analyst,
portfolio
manager of
futures and
options, product
developer, and
founding -- and
current --
member of its
risk management
committee.
“At Friedberg we
take our time to
get confident
things work
before offering
them to outside
investors,”
Rothberg says.
The Friedberg
Global Macro
Fund, like the
Niagara
Discovery Fund,
had a four year
history before
being actively
marketed.
Niagara
Discovery Fund
uses many of the
same tools
Rothberg has
seen FMGL use in
its asset
management
business over
the years:
momentum,
fundamental and
technical
analysis,
sentiment,
pattern
recognition, and
value. Being
different, the
tools offer
relatively
uncorrelated
return streams.
To find
‘operators’ for
the tools,
Friedberg
developed a
qualitative
method. Rothberg
got traders’
month end
statements,
plotted their
buys and sells
over the charts
of markets they
traded, then
Friedberg,
without knowing
anything about
the trader or
his returns,
looked at the
trading patterns
in search of
‘elegance’.
“We didn’t
define the
term,” Rothberg
explains.
“Friedberg
assumed we’d
know what it
meant when we
saw it. And he
was right.”
The first
operator
Friedberg and
Rothberg chose
was a momentum
specialist. The
pattern
recognition
specialist came
on board ten
months later,
the fundamental
and technical
operator five
months after
that. Value
joined in the
summer of 2009,
and sentiment in
the fall of that
year.
“It’s a good
team,” Rothberg
says. “The
operators come
from different
backgrounds and
use different
approaches but
they all embody
dedication,
creativity,
sharpness and
tough-mindedness.”
While they were
searching for
the right mix of
tools and
operators,
Rothberg and
Friedberg
developed a risk
management
process
customized to
the fund.
“We learned to
allocate in
terms of
volatility and
correlation,
i.e. in terms of
capital
preservation and
not in an
attempt to
maximize
returns,”
Rothberg says.
“We learned how
to verify that
each operator
observed his
own, local, risk
management
rules. And we
learned how to
determine when
the tools in
aggregate
accidentally
brought too much
risk to the
portfolio
universally. And
finally we
developed a
method of
seeking to hedge
that risk out.”
In taking from
2006 to 2010 to
refine and test,
the Canadian LP
marinated in
three distinct
and very
challenging
environments. It
was profitable
in all of them,
including 2008
and 2009, the
latter being a
particularly
difficult year
for
futures-focused
strategies.
One, three, and
life-to-date
returns of the
Canadian LP have
been 22.99%,
20.15%, and
18.78%,
respectively.
Annualized
volatility has
averaged
16.65%.*
“Good things
take time,”
Rothberg says.
“Niagara
Discovery Fund
is a fund built
entirely on our
experience. We
know the tools
work. We
understand how
they work. We
used our
experience to
develop our own
way of selecting
the operators.
Experience is
another way of
speaking about
time.”
Niagara
Discovery Fund
Ltd. is a feeder
fund to Niagara
Discovery Master
Fund Ltd., a
Cayman Islands
fund of managed
accounts
custodied at
Goldman Sachs
Execution &
Clearing, L.P.
through Merlin
Securities.
Seward and
Kissel LLP and
Walkers are
counsel to the
fund and to
Niagara.
Rothstein Kass &
Company audits.
Cayman National
Fund Services
Ltd. is the
administrator.
Niagara Capital
Partners Ltd. is
an asset
management firm
headquartered in
Toronto, Canada
specializing in
liquid
alternative
investment
strategies.
*“Past
performance is
no guarantee or
projection of
future results.
Performance
numbers reflect
a ceiling on
administrative
expenses charged
to the fund of
40bps.
Performance
attributable to
all five
‘operators’ from
November 2009
only. Under no
circumstances
should the
information
contained herein
be used or
considered as an
offer to sell,
or a
solicitation of
an offer to
purchase, any
security or
investment
service. The
information
presented herein
is presented in
summary form and
is, therefore,
subject to
qualification
and further
explanation.
More complete
information
about Niagara
Capital products
and services is
contained in the
descriptive
documents for
such products
and services.”
###
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