WP Canada: Caldwell announces soft close on successful Value Momentum Fund

Caldwell announces soft close on successful Value Momentum Fund

By Noelle Boughton

November 29, 2021

Advisors who supported its almost five-fold growth can still access it while firm slows asset growth

Caldwell Investment Management Ltd. has announced its first soft close of the successful Canadian Value Momentum Fund, which has grown from $40 million at the start of COVID to almost $230 million today, the fund manager told Wealth Professional.

“We’re proud to cap the fund and still maintain the ability to continue adding value to investors,” said Jennifer Radman, a senior portfolio manager and Caldwell’s Head of Investments. “That’s not necessarily an easy business decision, to stop that when you have very strong momentum, in terms of money going into the fund.

“This is a very competitive industry. Fees are so low that essentially every new dollar of assets coming in is very profitable because it’s a fixed expense space. So, it would be very easy to say, ‘hey, look how great the strategy has done’ and just continue to grow, grow, grow. But, the problem with that is you start eroding the power of the investment strategy just because there’s not a ton of liquidity in the Canadian market. So, we’re very proud that, as an organization, we have put investors first. That was really the motivation for capping the fund.”

The fund identifies stocks in the Canadian market where the price is increasing and what’s driving that and, once it plays out, Caldwell actively trades it. “In 2020, the turnover was over 200%,” said Radman.

She attributes the fund’s success to the fact it was a good compliment to other funds. Its ten-year track record was also strong and, she said, “the COVID environment just helped us demonstrate how the strategy works in a very turbulent time”.

“Nobody needs another billion dollar Canadian equity fund,” she said. So, Caldwell opted for a soft close so investment advisors who are discretionary portfolio managers can continue to use it while Caldwell slows the fund’s asset growth.

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