Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
Source of data is Bloomberg unless otherwise indicated. The information contained herein is derived from sources which are believed to be reliable and every effort has been made to ensure the accuracy of its contents.
Publication Date: March 6th 2023
Auspice Diversified Trust (ADT) and the Auspice One Fund Trust (AOFT) are now available to all Canadian investors as National Instrument 81-102 (“NI 81-102”) alternative mutual funds “liquid alternatives” (no longer available to institutional and accredited investors only), now public mutual funds with daily liquidity. For the press release, see here.
From launching the Canadian Natural Gas ETF in 2008, a first in Canada, the Broad Commodity and Managed Futures ETFs in 2010-12, the Canadian Crude ETF in 2015, to launching the innovative Auspice One Fund before "Return-Stacking" was popularized - The Auspice team has long pioneered innovative paths.
Auspice has built key, foundational partnerships with retail distribution partners and institutional investors for many years. In 2020 we returned to what we believe is a more “normal” environment with quantitative easing completed and interest rates, volatility, and inflation no longer compressed. Alongside a decade of underinvestment in commodity infrastructure and supply, we are broadly bullish on the outlook for tactical commodity and CTA trading strategies.
We believe the time has come to again pioneer new ground and make our institutional strategies available to all. We are proud to share that after a multi-year process with Canadian regulators, we are opening access to strategies that we think every Canadian should have the opportunity to invest in.
Why is this so important?
“It is not credible to allow an entire generation of retail investors to be left with only diversified public market exposure to generate retirement returns, while institutional investors crowd into innovative business models through the private markets” (CFA Institute, 2018).
From an investor standpoint we think there are potentially significant net benefits to the investor. First, comprehensive risk management and effective diversification should be accessible to all investors, beyond institutional and high net worth investors. For years some of the largest pensions, endowments, and sovereign wealth funds have embraced Commodity Trading Advisors (“CTAs”) in “Risk Mitigating” and similar portfolios, with trend following CTAs often being the largest allocation in these portfolios (see “Institutional Use of Commodities & CTAs” on the Auspice Investor Education page). Retail investors should have the same access to such CTA strategies, particularly when a manager such as Auspice has a track record that spans 16+ years.
Second, the restrictive nature of exempt market products only being accessible to accredited and high net worth investors is in the past, replaced with a much more efficient, and importantly less time-consuming, subscription process. Also, the allocation limits associated with exempt market products many bank and independent wealth platforms have will may no longer apply to our funds.
Third, as NI 81-102 liquid alternative mutual funds, both Auspice Diversified Trust and Auspice One Fund Trust are now available with daily liquidity. We appreciate that typical “month-end” timing can be difficult, and daily liquidity can facilitate both rebalancing and subscription processes.
Finally, as part of relief granted by the Canadian securities regulators, there is increased risk reporting and enhanced oversight on our funds, a potential benefit to those less familiar with Auspice. While we will continue to manage risk and execute our strategies in the same manner we have historically, we will also be monitoring and managing risk to a maximum 20% VaR in conjunction with the relief granted by the regulators (versus the 300% gross notional constraint typically applied to NI 81-102 liquid alternatives; see simplified prospectus for more). This is consistent with regulations in other jurisdictions such as UCITS IV in the European Union (2010) and SEC Rule 18f-4 in the United States (2020).
Auspice is currently the only CTA in Canada to receive novel exemptive relief which allows it to use a VaR risk-based framework with respect to its public funds. As per the relief granted by the ASC / CSA here, Auspice, subject to complying with certain conditions, including having a Derivatives Risk Manager and a Derivatives Risk Management Program, has been allowed to us a VaR risk-based framework instead of having to comply with the 300% gross notional limit in NI 81-102, which Auspice believes is a more effective and appropriate risk measurement tool for its funds.
We are proud to take this step forward and help establish a modernized risk paradigm in Canada.
Key considerations to note:
There have been no changes to the strategy of either fund.
Conversion to NI 81-102 liquid alternative mutual funds is effective March 1st and we will begin accepting subscriptions, on a daily basis, March 13th 2023 (please contact us directly for timing).
We will provide updates our website, monthly email, and other forms of communication given the conversion to public funds. Many changes have been completed already, for example the Auspice Diversified Trust and Auspice One Fund Trust web pages have been updated, and further updates may take place in coming months.
Please stay tuned for further updates. As communicated consistently over the past few years, it is an exciting time to be a commodity focused fund manager!
For Fund Facts, the Simplified Prospectus, and other fund materials please see the Auspice Diversified Trust and Auspice One Fund Trust webpages.
For investor presentations and further information please email info@auspicecapital.com.
References
CFA Institute. (2018, November 29). Capital Formation: The Evolving Role of Public and Private Markets. Retrieved from https://www.cfainstitute.org/en/advocacy/policy-positions/capital-formation
Disclaimer Below
IMPORTANT DISCLAIMERS AND NOTES
Futures trading is speculative and is not suitable for all customers. Past results are not necessarily indicative of future results. This document is for information purposes only and should not be construed as an offer, recommendation or solicitation to conclude a transaction and should not be treated as giving investment advice. Auspice Capital Advisors Ltd. makes no representation or warranty relating to any information herein, which is derived from independent sources. No securities regulatory authority has expressed an opinion about the securities offered herein and it is an offence to claim otherwise. Please read the offering documents before investing.
Certain statements in this document are forward- looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “target”, “seek”, “will” and similar expressions to the extent they relate to the Fund and the Manager. Forward- looking statements are not historical facts but reflect the current expectations of the Fund and the Manager regarding future results or events. Such forward-looking statements reflect the Fund’s and the Manager’s current beliefs and are based on information currently available to them. Forward-looking statements are made with assumptions and involve significant risks and uncertainties. Although the forward-looking statements contained in this document are based upon assumptions that the Fund and the Manager believe to be reasonable, none of the Fund or the Manager can assure investors that actual results will be consistent with these forward-looking statements. As a result, readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results or events to differ materially from current expectations.
The forward-looking statements contained herein were prepared for the purpose of providing prospective investors with general educational background information about the Funds and may not be appropriate for other purposes. None of the Fund or the Manager assumes any obligation to update or revise them to reflect new events or circumstances, except as required by law.
This blog may contain hypertext links to web sites owned and controlled by other parties than Auspice. We have no control over any third-party-owned web sites or content referred to, accessed by or available on this web site and therefore we do not endorse, sponsor, recommend or otherwise accept any responsibility for such third-party web sites or content or for the availability of such web sites. In particular, we do not accept any liability arising out of any allegation that any third-party-owned content (whether published on this or any other web site) infringes the intellectual property rights of any person, or any liability arising out of any information or opinion contained on such third-party web site or content.
The contents on this website are provided for informational and educational purposes and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting and tax. Please consult with your own professional advisor on your particular circumstances.