Global Innovation Fund
Global Fund Objective
The fund, established in October 1998, invests in the innovation economy. By utilizing long and short strategies, the fund’s objective is to capture the upside returns of the technology, clean energy, and the innovation sectors while reducing volatility on the downside. The funds’ investing guidelines are focused on microcap (less than $500M market cap) companies, with the opportunity to invest up to 15% of the capital (at cost) in pre-IPO private companies.
The manager uses disciplined conservative fundamental analysis to determine both asset allocation and stock selection. Once a stock has been selected, technical analysis is used to assist in the timing of the purchase or sell. Asset allocation weighting is determined by sectoral growth rates, visibility and macro trend analysis. Once asset allocation is determined, individual stock selections are analyzed for their strength in three components: management, science and value. Firstly, the experience of management and their track records are thoroughly reviewed prior to any investment. Not as much an issue with large cap companies, differences in management capabilities are very apparent in small to mid cap opportunities. Secondly, the portfolio focuses on companies with scientific intellectual property that can be leveraged in the marketplace. Semiconductors, optical networking, switching equipment, amongst others are investigated for strength in technology and their patent portfolio. And finally, the stocks must be attractively valued. Traditionally, companies are purchased at a low valuation and held until a target sell price is reached. Since fundamental metrics are used, including earnings and cash flow, many internet early stage companies do not qualify for investment. They are considered overvalued and speculative. The portfolio invests in approximately 15 to 20 companies.
Subscriptions and redemptions are available monthly. Redemptions require a 30 day written notice to the fund manager (Commencing June 2008, new subscribers require minimum 2 year term for no penalty – 7% penalty for first 12 months, 5% penalty for 12 to 24 months)
Fees include a 2.5% per annum management fee plus a 20% profit participation. All fees are paid quarterly.
Transfer Agent and Custodian
Equity Transfer Services
Baldwin Sennecke Halman LLP (Toronto)
BMO Capital Markets