Mackenzie multi-strategy hedge fund breaks new retail ground

Regulators ease constraints on leveraging, short-selling and security-specific risk.

Rudy Luukko 3 May, 2018 | 5:00PM

Mackenzie Investments has received the green light from securities regulators for Mackenzie Multi-Strategy Absolute Return, a prospectus-offered hedge fund with remarkably relaxed risk constraints. The fund, managed internally by three Mackenzie teams, has a minimum investment of as low as $500 for retail purchase options. It's scheduled to go on sale on May 23, with the delayed rollout giving the company more time to educate its distributors on one of its most complex retail products.

In its May 2 product announcement, Mackenzie bills itself as the first company to bring to market for Canadian retail investors a fund that is based on the Canadian Securities Administrators' "alternative framework proposal" for retail funds. As Michael Schnitman, Mackenzie's senior vice-president of product, told Morningstar, the types of exemptive relief that the company has been able to obtain are part of proposed regulatory reforms but not official policy.

Normally, a mutual fund that is accessible to small investors has very strict limits and conditions on how much it can borrow. Not this fund. Regulators have granted an exemption allowing the Mackenzie managers to borrow cash totalling up to 50% of the fund's net asset value (NAV).

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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