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
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
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
SOURCE Pier 21 Asset Management Inc.
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