A group of Canadian heavyweights have formed Diversified Global Asset Management and kicked off a USD500 million fund of funds. The firm's co-founders are Neil Selfe, who was managing director of global banking at RBC Capital Markets, and George Main, cio for fund of funds giant Northwater Capital Management. Also joining from Northwater is Warren Wright, portfolio manager, in addition to Jeff Lucassen, the former controller at Ontario Teachers'Pension Plan Board. The Toronto-based firm is searching for managers in new strategies, such as structured finance, credit arbitrage and catastrophe bonds, said Selfe.
The new fund allocates across 24 strategies and invests in 37 hedge fund managers. The firm's principals have ventured into some esoteric strategies because of experience they gained at their old haunts. "George Main was one of the first portfolio managers to include reinsurance and ABS in portfolios he managed," said Selfe. "We think those new strategies can bring returns that are more consistent and persistent. But the tradeoff in some cases is less liquidity. That's why we look for sophisticated investors that have a longer term investment perspective and tend to be more patient," he said.
The size of the launch has already garnered some attention in the industry. "I think it is one of the largest fund of funds launches," said Dave Kabiller, founding partner at AQR Capital. "We are finding a significant amount of interest in our team from large pension plans, corporate plans, and foundations and endowments," Selfe said. Only 25% of its investors are located in Canada, with remainder located in the U.S. and Europe. DGAM has not done much marketing for the DGAM Partners Fund, relying mostly on word-of-mouth communications. "We focus very little time in marketing. The brochure is the only thing we got," quipped Selfe.
