AGF Investments Inc. has entered into a new partnership agreement with U.S-based ETF manager FFCM LLC after former portfolio manager F-squared Investments declared bankruptcy last month.
F-Squared was a key player in the development of the AGF U.S. AlphaSector Class, a U.S. equity fund that invests in exchange-traded funds and grew to $467-million in assets as of December 31.
After being slapped with a hefty fine of $35-million (U.S) by the U.S. Securities and Exchange Commission, and admitting to falsifying performance numbers in advertising and marketing materials, F-squared filed for bankruptcy protection last month.
As a result, FFCM and Highstreet Asset Management Inc. will take over portfolio advisor duties relating to AGF U.S. AlphaSector Class at the end of this month, and the fund will be renamed AGF U.S. Sector Class.
FFCM, based in Boston, currently manages a family of market and sector neutral ETFs and a number of ETF managed strategies. Although FFCM has extensive experience in ETF products, AGF is currently not looking at introducing ETFs to its product line up at this time, says Pamela Marchant, vice-president of marketing & communications for AGF.
"Because FFCM create, structure and manage ETFs, their key differentiator in creating portfolios of ETFs is a thorough understanding of the underlying instruments which enables better asset allocation decisions and risk controls," says Ms. Marchant.
AGF U.S. Sector Class will employ a combination of FFCM's sector model with Highstreet's market risk model to provide U.S. equity market exposure in a risk aware manner that focuses on limiting downside volatility for investors.
"The combination of FFCM and Highstreet offers investors all the opportunities of market participation with the assurance of a proven approach to managing volatility," said Kevin McCreadie, president and Chief Investment Officer, AGF Investments Inc. in a statement. "We will continue to look for ways to optimize the strengths of these two firms for the benefit of our clients."