Webb Preps For Launch Of Two Canadian-Focused Funds

Dec 8 2005 | 5:06pm ET

Newly-created California-based Webb Asset Management is launching its first fund, a Canadian long/short fund, in January, and plans to roll out a second fund, an offshore vehicle, in February.

Derek Webb, founder and ceo of the firm, said the Canadian long/short fund, which has yet to be named, will launch with between $10-20 million, but has the capacity to take in up to $1 billion.

The fund will invest only in Canadian equities and will target Canadian high-net-worth investors. The minimum investment in the fund will be in line with the laws governing the various provinces, and according to Webb, British Columbia has the lowest minimum requirement for a hedge fund investment, C$50,000. There is no lockup period, and there will be a 2.5% management fee and a 20% performance fee.

Webb decided to launch a Canadian fund because based on his experience and quantitative analysis, Canada was a strong market. “We believe that this market offers the highest absolute and risk adjusted returns of any market in the world for the strategy which we are going to employ,” said Webb.

The firm’s second fund, which is expected to be launched in February, will employ the same strategy as the Canadian long/short fund but will be domiciled offshore and target U.S. and foreign institutional investors. The fee structure will be slightly different, with 1.5% charged for management and 20% for performance. Webb believes the initial interest in the offshore fund will come from European investors who would like to gain North American exposure.

“The difference [between the funds] is that in Canada we are using retail distribution, whereas in the offshore fund we will be going to fund-of-funds and institutions,” said Webb. “A lot of people are realizing that Canada is a good place to invest…. There aren’t many hedge funds in Canada, and as a result the returns you are getting are much higher.”

Previously, Webb managed $5 billion for AIM Funds, a subsidiary of AMVESCAP, where he worked from 1992 to 2000. He then left the firm to launch his own fund, which he closed in 2004 before taking a year off to go hiking and work on quantitative research.

Webb is partnering with Toronto-based Jovian Capital Management for marketing and distribution of the first fund. The Bank of Nova Scotia is acting as the prime broker.

Mike Schantz, who is in the process of shuttering his San Francisco-based asset management firm, GTS Capital Management, will be working with Webb on the funds.


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