Implementation of the multi-dimensional risk management mandate is executed through:

Short Selling Strategies

Short selling is utilized with the sole purpose of offsetting company specific, sector and commodity price risks in the portfolio. 

Flexible Mandate

The mandate of the Fund allows the managers to move equity investments to cash or bonds to preserve capital during bear markets.

Proprietary Software

A software program built to simultaneously identify short-term fluctuations in sectors and asset classes is used to reduce month-over-month volatility.

Currency Exposure

Fluctuations in the currency can have a significant impact on investment returns.  The managers will actively manage the Canadian/USD foreign exchange exposure to reduce currency risk in the portfolio.

Equity Risk Premium Strategy

The Fund’s market exposure varies throughout a market cycle; adjustments to net market exposure are primarily driven by changes in the equity risk premium.

Use Of The Equity Risk Premium

The BluMont North American Opportunities Fund, unlike other Canadian long/short equity funds, uses a risk management strategy that adjusts the Fund’s net market exposure throughout the market cycle based on the equity risk premium. 

The equity risk premium is the additional return or “premium” above the risk-free rate¹ that an investor can expect for taking on the higher level of risk of investing in equities.

The Investment Advisor of the Fund analyzes changes in the equity risk premium to determine whether they should alter market exposure. To minimize losses, the Investment Advisor may reduce market exposure when the equity risk premium declines.  Conversely, when the equity risk premium increases, the Investment Advisor may increase market exposure to profit from rising markets.