MANNA is acutely aware of the issues faced by hedge fund investors when they invest in a single manager fund or a fund of hedge funds.  Based on MANNA’s experience, the Canadian Managers Fund 1 will open a Managed Account for each Investment Manager rather than invest in the Investment Manager’s own hedge fund. The Fund is thus a multi-manager fund or “Fund of Hedge Fund Managers” and not a traditional “fund of funds”.

With a Managed Account, the Fund opens a segregated brokerage account with its prime broker and grants discretionary trading authority over that account to the underlying Investment Manager.  The Fund’s capital is not co-mingled with other investors’ capital managed by that underlying Investment Manager. The Managed Account accords much greater control than an investment in an underlying Hedge Fund since the Investment Manager has no access to the cash and the Investment Manager can only trade the account in strict accordance with the investment guidelines/restrictions set down in the Fund’s agreement with that Investment Manager – as monitored by MANNA.

From a transparency point of view, the Fund has the right to see every investment made and can demand more frequent reporting by the Investment Manager. The management fees are negotiated directly with the Investment Manager on each account – so the Fund is not constrained by the fee level set by the underlying Investment Manager on their hedge funds.

In terms of liquidity, the Fund can demand the right to go 100% to cash at short notice and or withdraw capital at will. In practice, the managed account agreement will set out some limits on liquidity (commensurate with the agreed investment style), but the Fund can correct style drift or excessive risk taking at an earlier stage.