Key Takeaways
- • Fidelity Investments Canada launched four new funds in October 2020, including three liquid-alternative mutual funds designed to provide portfolio diversification beyond traditional long-only strategies.
- • The three alternative funds employ varying leverage strategies: the Global Value Long/Short Fund allows short-selling up to 50% of net asset value; the Market Neutral Alternative Fund permits leverage up to 100%; and the Long/Short Alternative Fund uses approximately 30% leverage, all managed by experienced portfolio managers (Dan DuPont, Brett Dley, and David Way respectively).
- • The Market Neutral Alternative Fund specifically targets low correlation to major equity markets through Canadian and U.S. equity positions, addressing institutional and retail investor demand for non-correlated return streams during periods of elevated market volatility.
- • Fidelity positioned the launches as a strategic response to 2020 market conditions, including extreme volatility, historically low interest rates, and investor demand for "differentiated solutions," according to Kelly Creelman, senior vice president of Products at Fidelity.
- • The fourth fund offering rounds out the product suite with a diversified global equity strategy, complementing the alternative offerings and broadening Fidelity's appeal across investor risk profiles.
Summary
Fidelity Investments Canada expanded its alternative investment offerings in October 2020 with the introduction of four new actively managed funds, marking the firm's entry into the liquid-alternatives market for retail investors. The initiative reflects Fidelity's strategic pivot toward providing non-traditional investment vehicles amid widespread portfolio diversification demand and elevated market uncertainty during 2020.
The three liquid-alternative mutual funds represent distinct strategy archetypes. The Fidelity Global Value Long/Short Fund, managed by Dan DuPont, employs a global equity approach with leverage capabilities up to 50% of net asset value through short-selling and derivatives, targeting long-term capital appreciation across international markets. The Fidelity Market Neutral Alternative Fund, managed by Brett Dley, is specifically engineered to minimize correlation with major equity indices through simultaneous long and short positioning in North American equities, with leverage permitted up to 100% of net asset value—the most aggressive leverage profile of the three offerings. The Fidelity Long/Short Alternative Fund, managed by David Way, focuses on Canadian and U.S. equities with moderate leverage of approximately 30% through short-selling and derivative positions.
The timing of these launches aligned with market conditions defined by significant volatility, historically compressed interest rates, and investor concerns about traditional portfolio construction. Kelly Creelman, senior vice president of Products at Fidelity, characterized 2020 as "a year of considerable volatility across a variety of markets" and noted that clients were actively seeking "differentiated solutions to help them navigate the markets." The product suite—which includes a fourth diversified global equity fund alongside the three alternative strategies—positions Fidelity to capture demand across the risk spectrum, from conservative diversified equity exposure to sophisticated alternative strategies employing leverage and short-selling mechanisms traditionally available primarily through institutional channels.
The three liquid-alternative mutual funds represent distinct strategy archetypes. The Fidelity Global Value Long/Short Fund, managed by Dan DuPont, employs a global equity approach with leverage capabilities up to 50% of net asset value through short-selling and derivatives, targeting long-term capital appreciation across international markets. The Fidelity Market Neutral Alternative Fund, managed by Brett Dley, is specifically engineered to minimize correlation with major equity indices through simultaneous long and short positioning in North American equities, with leverage permitted up to 100% of net asset value—the most aggressive leverage profile of the three offerings. The Fidelity Long/Short Alternative Fund, managed by David Way, focuses on Canadian and U.S. equities with moderate leverage of approximately 30% through short-selling and derivative positions.
The timing of these launches aligned with market conditions defined by significant volatility, historically compressed interest rates, and investor concerns about traditional portfolio construction. Kelly Creelman, senior vice president of Products at Fidelity, characterized 2020 as "a year of considerable volatility across a variety of markets" and noted that clients were actively seeking "differentiated solutions to help them navigate the markets." The product suite—which includes a fourth diversified global equity fund alongside the three alternative strategies—positions Fidelity to capture demand across the risk spectrum, from conservative diversified equity exposure to sophisticated alternative strategies employing leverage and short-selling mechanisms traditionally available primarily through institutional channels.
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