Topic: How To Invest

Q: Hello, TSI team. As a long-time Inner Circle member, I value your opinion. I would appreciate your thoughts on the Desjardins Alt Long/Short Equity ETF as a vehicle to park cash for a number of months while waiting for opportunities. I realize the fees are relatively high, but it seems to have weathered the February/March turbulence quite well. Thank you.

Article Excerpt

A: The Desjardins Alt Long/Short Equity Market Neutral ETF, $21.15, symbol DANC on Toronto (Shares outstanding: 11.9 million; Market cap: $251.7 million; www.fondesjardins.com), holds a portfolio that consists primarily of pairs of Canadian stocks in the same sector, one of which is a long position and the other a short. For instance, the ETF recently held a 1% long position in the pipeline utility Enbridge Inc., offset by a similarly sized short position in Pembina Pipeline. This strategy is aimed at neutralizing market exposure by being long and short in the exact amounts in the same sector when possible. The fund seeks to maintain close to zero the correlation to its S&P/TSX Composite index benchmark. The ETF started up January 24, 2019, and its MER is 1.13%. Investors currently receive a quarterly distribution of $0.05 for a yield of 0.9%. The fund’s strategy could limit your losses if markets plunge. It would also hold back your gains when the market rises. However, this “pairs-trading”…

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