Frequently Asked Questions
- How is the Fund structured?
The Algonquin Debt Strategies Fund is a Limited Partnership. The Algonquin Trust is a Mutual Fund Trust which invests solely and directly in the Algonquin Debt Strategies Fund Limited Partnership. Each structure contains special terms that are outlined within their respective Offering Memorandum.
- Which structure is right for me?
Generally speaking we direct individual investors to invest via the Algonquin Trust and corporate investors to invest directly in the Limited Partnership. Each investor’s situation is unique and each structure contains unique features, so we recommend seeking the advice of your advisor or accountant. Investors should be aware, the Algonquin Trust has expenses that are separate to those of the Limited Partnership. As such, the Algonquin Trust’s performance will be slightly below that of the Limited Partnership.
- Where is Algonquin Capital Registered??
Algonquin Capital is registered as an Investment Fund Manager, Exempt Market Dealer and Portfolio Manager in Ontario. It is registered as an Investment Fund Manager and Exempt Market Dealer in Quebec. In British Columbia and Nova Scotia it is registered as an Exempt Market Dealer.
- Can I hold this investment in my RRSP, RESP or TSFA?
Access to the Algonquin Debt Strategies Fund is available for registered and tax-free savings accounts. The subscriptions will be via the ‘Algonquin Trust’, which will invest solely and directly in the Fund (Limited Partnership).
- When can I invest?
The Fund is currently open to new investors. New investors purchase units of the fund on the first business day of the month. This is so that the NAV at which the investor is purchasing new units has been independently calculated by SGGG Fund Services.
- What oversight is there on the fund?
Both the Fund Manager (Algonquin Capital Corporation) and the Fund (Algonquin Debt Strategies Fund LP) are overseen by the Ontario Securities Commission (OSC). TD Securities provides prime broker services to the fund. SGGG Fund Services maintains client records, provides client tax reporting and independently calculates the NAV. KPMG provides an annual audit of the fund. Finally Wildeboer Dellelece and AUM Law provide legal and compliance services to the fund.
What Can the Fund Invest In?
- What limitations are on the investment strategy of the Fund?
The following limitations apply to the Fund:
- A minimum of 70% of total exposure is held in investment grade securities, where investment grade is defined as securities that have at least a BBB rating (or equivalent) by at least one recognized rating agency;
- A minimum of 60% of total exposure will be invested in “North American” securities. The Investment Manager defines “North America” to include the jurisdictions of Canada and the US;
- A maximum of 15% of the total exposure will be invested in a single corporate issuer;
- The maximum amount of leverage that the Partnership can employ is 6:1;
- The maximum market value of “Alternative Debt Instruments” will not exceed 10% of the total exposure. Alternative Debt Instruments include bank loans, private placements, unrated debt and structured credit instruments.
- Can the fund invest in derivatives?
The fund can and does intend to use interest rate futures, interest rate swaps and options, and credit derivatives as well as equity index futures and options. Derivative instruments can be used to achieve investment returns or to mitigate risk.
- How does the Fund protect itself from changes in interest rates?
The core of our strategy is to separate a corporate bond into its two risk components: credit risk and interest rate risk. We do this by buying a corporate bond, while simultaneously selling a government bond. This bond package is now largely insulated from changes in interest rates.
Where Does This Fit in My Investment Portfolio?
- What is the Fund’s target return?
The Fund targets an absolute return of 6% to 9% after fees with little sensitivity to changes in interest rates as well as equities.
- Why would I invest?
The fund offers investors portfolio diversification from both interest rates and equities. With correlation in the public equity markets at sustained highs and yields on fixed income at record lows, the inclusion of alternative investment classes is a necessary element in constructing portfolios designed to increase total returns to investors without exposing them to increased risk and volatility.
I Want to Invest. What Do I Need to Know?
- Am I eligible to invest?
You must be an ‘accredited investor’. Click Here to see the list of criteria that are used to qualify as an accredited investor. You must meet one of the criteria on the list.
- How do I invest?
To discuss whether the fund is suitable for you, please contact Raj Tandon at email@example.com or call him at 416-214-3493. Raj will be happy to answer all your questions and should you wish to invest, Raj will guide you through the steps involved in the subscription agreement.
- How long is my money tied up?
The fund has no lock up period.
- How do I make a redemption request?
An investor should send a written request (email is acceptable) to firstname.lastname@example.org, giving at least 25 days notice. Redemptions are then processed once the month end NAV has been finalized.
What Investor Information Will I Receive?
- Does the fund issue certificates?
No certificates are issued when you make an investment. SGGG will send a confirmation to show that an investment has been made. We recommend keeping this confirmation and a copy of the subscription agreement for your records.
- How and when is the NAV calculated?
The NAV is calculated monthly by SGGG Fund Services and is published by them 10 business days after month end. SGGG calculates the NAV using data obtained from independent sources. Not only do we verify their calculation, we also calculate the NAV on a daily basis for our own analysis. The NAV is reported by SGGG to unit holders on a quarterly basis
- What tax reporting can I expect?
SGGG will provide Limited Partnership investors with a T5013 Statement of Partnership Income. They will provide Trust investors with a T3.
- What financial information regarding the partnership can I expect?
An investor can elect to receive the semi-annual unaudited financial statements prepared by SGGG Fund Services as well as the annual audited financial statements prepared by KPMG.
What Fees Can I Expect to Pay?
- How do management fees and profit distribution work?
Please see the below example.
|Return after Fund Expenses||$0.90||$90,000.00|
|Management Fee (1.5%+HST)*||($0.1847550)||($18,475.50)|
|Profit After Management Fee||$0.715245||$71,524.50|
|Profit Distribution (15%)**||($0.1072868)||($10,728.68)|
* charged on period ending value
** no HST charged
- How does the High Water Mark work?
In the example below, profit distribution is paid in Year 1 and Year 3. The performance fee in Year 3, only applies to the gain in NAV from the end of Year 1.