Pier 21 Asset Management Offers Canada's First Zero-Fee Global Resources Strategy

MONTREAL, April 28 /CNW/ - Canadian institutional investors should consider replacing a portion of their Canadian equity allocation with a global diversified natural resources strategy. They now have access to The Pier 21 Global Resources Strategy, which reflects the true complexity of global resources sectors and insulates against the threat of inflation, all with a guarantee that there will be zero investment management fees if the Strategy doesn't outperform its benchmark.

"The majority of the Canadian equity stock market is comprised of resource-related equities, and investors in Canada that hold 30 to 35% of their total portfolios in Canadian equities are therefore some 20% invested in Canadian resources automatically," says David Star, President and CEO of Pier 21 Asset Management Inc., the manager of the Strategy. "These portfolios are exposed to very specific commodity, currency, stock and to a lesser extent, country risks. We believe that allocating part of investors' Canadian equity holdings to a global resources strategy is a natural extension of Canadian investing and diversification logic."

While Canada is resource-rich, more than two thirds of the world's natural resources actually lie in emerging markets. Emerging markets are also key demand drivers for the commodity bull market that is fully underway. Furthermore, despite the inherent commodity base in Canada, there are many resources, such as iron ore, not widely present. The Pier 21 Global Resources Strategy allows for participation around the world, wherever the most compelling opportunities exist.

The Strategy is sub-advised by Newgate Capital Management LLC, who entered into an exclusive advisory arrangement with Pier 21 for the Canadian institutional marketplace. Founded in 1982 and based in Greenwich, Connecticut, Newgate is a highly experienced, 100% employee-owned investment manager with over $3 billion in assets under management. Newgate has been managing global resources since 2004, as an extension of their experience in emerging markets investing. Newgate has been creating and implementing investment ideas based on their analysis of these markets for nearly 20 years.

"The strength in the resource sectors over the past couple of years has been very broad, and we believe there is still quite a bit of upside remaining.  We are bullish, and at this stage of the cycle it is important to be selective," says Matthew Peterson, Director and Portfolio Manager at Newgate Capital Management. "With our top-down thinking, investors can take advantage of weaknesses in certain region- or industry-specific markets, rotating to those resources where the fundamental supply and demand characteristics are most favourable."

This Strategy is also unique because it invests primarily in equity-related commodities, and not in commodity futures.

"Purchasing a commodity-related future or commodities index is a one-dimensional bet on its price," explains Peterson. "However, investing through The Pier 21 Global Resources Strategy allows for participation in all aspects of resource production and consumption. We can invest in producers, refiners, transportation companies and a host of related industries. At different times in the cycle, certain aspects of the business will be more or less attractive than others."

Beyond the very compelling investment case for commodity-related equities, investing in The Pier 21 Global Resources Strategy presents a lower risk entry point today. The Strategy can profit even if prices stabilize at these levels. First, it's inflation, not volatility that erodes the long-term investor's real portfolio returns. Commodity prices rising are often the source of higher inflation, so natural resources are a direct hedge against inflation, protecting the investor's buying power over time. Second, the strength of the Canadian dollar today mitigates downside risk from currency. Third, supply shocks can create short-term inflationary spikes; often caused by events like those we've seen recently -- earthquakes or regional civil unrest. Resources typically benefit from such events. And finally, the zero-fee feature in the product design allows investors to avoid paying should the Strategy underperform its benchmark.

"We believe Canadian investors should benefit from the true conviction of a skilled manager such as we have found with Newgate," says Star. "The zero-fee feature allows us to be fully aligned with the objectives of our customer - they don't pay when they don't win."

The Pier 21 Global Resources Strategy will be available via three different vehicles: a Canadian-domiciled institutional pooled fund, a separate account for investors with more than $20 million, and as a model portfolio.

Pier 21 Asset Management Inc., is a Montreal-based, independent institutional asset management firm specializing in international and global asset classes. They offer investors long and established performance track records through exclusive relationships with sub-advisors that have been managing assets around the world for many years. Since its launch in 2005, Pier 21 has grown to $1.2 Billion in assets under management with pension plans, trusts, foundations, endowments and sub-advisory services for institutional clients across Canada. 

SOURCE Pier 21 Asset Management Inc.

For further information:

David Star 
President and CEO
Pier 21 Asset Management Inc.
514-397-4027
davidstar@pier21am.com
        Matthew Peterson
Director, Portfolio Manager
Newgate Capital Management, LLC
203-661-3871
Matthew.peterson@newgatecapital.com
        Judith Timoll
Principal, Investment Director
Newgate Capital Management, LLC
203-661-2059
Judith.timoll@newgatecapital.com

 

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Pier 21 Asset Management Inc.

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