Date Launched: Feb 10, 2010
Investment Strategy:
HAV is an actively-managed ETF that invests in North American (primarily US) equities in order to achieve long-term capital appreciation and income. The sub-advisors, Patient Capital Management, utilize a value methodology to pick investments. The fund aims to purchase investments at favourable valuations, identified through research on company balance sheets, cash flows and management strength. HAV is allowed to invest up to 25% of its assets in cash if managers have a negative view of the market, and they will also look hedge the ETF’s US currency exposure. HAV is benchmarked to the S&P500 Index.
Portfolio Managers:
Investment decisions for HAV are made by Patient Capital Management, which was established in 2000 to provide services to high net worth individuals and institutional clients. The investment decisions for HAV are made by:
Vito Maida – has more than 22 years of investment management experience, managing high net worth, institutional and mutual fund portfolios. He is a founding partner of Patient Capital.
Domenic Rinaldi – has more than 25 years of experience in managing business enterprises and consulting on tax and financial matters. He is founding partner of Patient Capital and is responsible for managing the day to day operations of Patient Capital.
Past Performance:
Digging into the some of the performance numbers presented on Patient Capital’s website, the fund has beaten both the S&P500 and the S&P/TSX by quite a margin since inception in March, 2000 – outperforming them by 12.68% and 3.80% respectively, as of Dec 31, 2009.
The Numbers:
Expense Ratio – 0.70% + Performance Fee (20% over benchmark with high water mark)
Market Cap – $10.78 million
Average Volume – n/a
What’s special about it?
1. The hedge funds style performance fee is not common to ETFs and will likely eat up quite a lot of return from investors, especially in times of good returns.
Analysis:
Positives –
- The huge outperformance achieved by Patient Capital is very impressive and while it remains to be seen whether that performance can be translated into this new fund, with a new ETF structure, the reputation that Vito Maida brings should attract investors to HAV.
Negatives –
- Like AlphaPro’s dividend strategy, HAV doesn’t really provide investors with anything unique that they haven’t already seen. Again, the only thing it can rely on to attract investors is to have a stellar record beating the numerous other value funds out there.
- Until HAL attracts some investor attention, volumes are likely to remain very low as they are now. This will impact liquidity and will result in high bid-ask spreads for investors.
Performance vs S&P500 Index:
Disclosure: No positions in above-mentioned names.
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