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TORONTO (Reuters) - Som Seif, founder and former president of Claymore Investments Inc, has launched a Canadian asset management firm aimed at low-fee investments for institutional and retail investors, unveiling its first fund on Thursday.
The new firm, Toronto-based Purpose Investments, promises to use rules-based investment management to keep fees low and risk in check, a semi-passive management structure that hopes to appeal to investors who like the low fees of the exchange traded funds (ETFs) that made Claymore such a success.
Claymore, founded by Seif in 2005, was one of the fastest-growing investment firms in Canadian history and Canada's No. 2 ETF provider with assets of $8 billion before it was bought by BlackRock Inc (BLK.N) last year.
Now Seif is back on the scene with Purpose Investments. Its first vehicle, NexC Partners Corp, is a closed-end fund focused on dividend-paying North American equities. NexC aims to provide long-term capital appreciation and quarterly cash distributions at a projected rate of 5 percent a year.
"My goal is very simple. I want to deliver really high-quality investment products but at a lower fee than others would normally offer them at," Seif said in an interview.
Using rules-based management within the funds keeps costs low, but Seif said he also simply believes it is the best way to maximize returns.
"Systematic, rules-based, disciplined investment strategy will trump active management over the long term because we can capture a large part of what the great active managers do through our fundamental screening and rules, and then we can also keep our costs low and outperform. I've proven that in the past," he said.
But Seif, who, along with his partners, is funding the company, also wanted to find a way for clients to invest in the company as whole.
"I want our clients to be owners as well," said Seif, adding he regretted not being able to do that at Claymore and has spent the months since the takeover trying to think of a way to offer ownership to investors.
To that end, Purpose is launching an initial public offering for NexC. The fund, which will subsequently trade on the stock exchange, will invest in a high-quality portfolio of 40 North American growth-oriented companies while offering investors a small stake in Purpose.
All in all, investors can own anywhere from 2.5 percent to 30 percent of Purpose, depending on how much the gross proceeds of the offering are, Seif said, calling the ownership structure "very innovative".
He said it would take a few years to build Purpose's family of funds, and he does not intent to make it the kind of asset manager that offers 50 or 100 products.
"Every product should stand alone," he said, adding that the firm's main commitment will be low fees across the board.
"I want to truly change the way people invest in Canada, make it cheaper and better."
Editing by Frank McGurty; and Peter Galloway