Global investment made in Toronto

Date: Friday, April 21, 2006
Author: Hedgeweek.com

Arrow Hedge Partners Inc. is an investment management company founded in 1999, specialising in providing hedged fund of funds strategies to high net worth investors worldwide, and from uniquely regional perspectives. Arrow Hedge is headquartered in Toronto, with its research team covering the Canadian, US, Latin American and Asian markets. Based in Geneva, Sarah Caygill provides additional research coverage from a distinctively European vantage point.

In addition to its strong global research coverage, Arrow Hedge has adopted an investment process that has capitalised on some of the most innovative and dynamic developments in alternative investments: early stage managers and strategies. Investing in early stage managers and strategies represents the core to  Arrow’s approach.

Arrow Hedge firmly believes that early stage managers are most compelling due to their competitive return profiles relative to their more established peer groups. Additionally, early stage managers have tremendous advantages in focusing on niche markets and investment styles.

For example, early stage managers have much more flexibility in managing smaller pools of capital, enabling greater tactical movement in to and out of their positions. This, in turn, is especially critical to Arrow’s asset allocation decision-making as early stage platforms provide a means to prudently scale into underlying investments.

As well, the early stage focus also represents a more efficient method – hence longer-term allocations – in deploying capital, as Arrow’s investments are able to grow alongside the underlying manager’s assets.  This focus on early stage investing has also compounded the importance of thorough and rigorous due  diligence on all underlying investments. The due diligence process is perpetual and designed to capture the dynamics of our managers’ investment as well as business or organisational development.

Additionally, Arrow utilises a number of proprietary risk tools for determining individual and aggregate level exposures and has supplemented these with solutions from Bear Measurisk, enabling more robust risk monitoring and measurement.

The investment model constructed by Arrow’s research and investment management team is expressed through specific fund of funds portfolios, which are designed to suit different investment objectives and investor demands. These fund of funds are at the centre of Arrow’s business model and are constantly monitored and re-balanced.

Arrow manages two flagship fund of funds for its Canadian investors, one a multistrategy product, which encompasses a broad spectrum of investment styles including equity hedge, relative value, event driven and global macro, the other a dedicated global equity long/short strategy. Arrow has mirrored this approach to its offshore investors as well through its Compass and Voyageur funds.

The success of both the onshore and offshore products is a testament to Arrow’s unique global research  coverage and focused investment process. Since inception, all funds have met their risk-return objectives and have outperformed their respective industry peer groups.

By Jennifer Wood and Mark Purdy - Jennifer Wood is a research analyst and a member of the investment committee and Mark Purdy is chief investment officer with Arrow Hedge Partners in Toronto.