AGF hopes to lure investors with pledge not to lose their money

Tue Sep 10, 2013 4:12pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - AGF Management Ltd hopes to lure Canadian investors back to its mutual fund lineup with a new class of equity funds whose goal is simple: not to lose money.

With the 2008-09 financial crises still in the rear view mirror, many Canadians have been reluctant to return to the equity funds that were both the bread and butter of their portfolios and cash cows for fund companies.

To woo those risk-averse investors back, AGF Chief Executive Blake Goldring has teamed up with Boston-based F-Squared Investments, a privately held investment manager, to launch the AGF U.S. AlphaSector Class of funds, designed to cut the risk of downturns while capturing gains in rising shares.

"How do you participate in the rising equity market without being threatened by downdraft? That's a real concern for people," said Goldring, whose fund company has faced a sea of net redemptions since 2008 but hopes investors are ready to get back in the game.

"Our focus is to avoid losses, particularly significant losses. If we get the job done, we actually beat the S&P more often than not, but our goal is never to actually beat the S&P," said F-Squared founder and President Howard Present.

The fund invests in exchange-traded funds representing the primary sectors of the Standard & Poor's 500 Index, and reverts to cash depending on signals from those sectors. It is a quantitative model that allows for no subjective calls in the event of a bull or bear market.

"They are playing into what has transpired since the financial crisis - listening to people worried about the downside, not just volatility," said Pauline Shum, an associate professor of finance at the Schulich School of Business at York University in Toronto.

Shum said she does not endorse the AGF product but knows the hangover of risk-aversion that has dominated the investment environment. So playing to that skittishness is not an unwise strategy.   Continued...