Montrusco Bolton Investments of Montreal and Bermuda-based hedge fund specialist Focus Group have structured an issue of principal protected notes in cooperation with Business Development Bank of Canada.

The two firms have appointed National Bank Financial as lead agent to make the Montrusco Bolton Focus Global Protected Notes available across Canada. The notes are RRSP eligible as Canadian content

The return on the notes will be linked to the return of Montrusco Bolton Focus Global Protected Fund, which invests in a portfolio of diversified strategies of highly specialized alternative investments.

The initial hedge fund portfolio will consist of 15 highly specialized and well-diversified hedge funds that employ several investment strategies, such as convertible arbitrage and merger arbitrage — that are designed to capitalize on market inefficiencies and investment opportunities, regardless of the direction of the markets.

The partners say the venture capital approach to hedge fund investing will enable investors to access the highly specialized strategies of the underlying funds before they reach capacity. The Montrusco Bolton Focus Global Protected Notes are RRSP eligible as Canadian content.

The two firms partnered last summer to help expand in the fast-growing market of alternative investments in Canada. They launched their first fund of funds in February 2002.

“While hedge funds are gaining acceptance in Canada, most are under-diversified and make blind allocations to managers, thereby increasing risk,” stated Frank Belvedere, vice president of Montrusco’s Alternative Investments. “The combined experience of our partner, Focus Group, and Montrusco Bolton working with large institutional investors, led us to take a different course of action,” he concluded. “This product is ideal for risk-averse individual investors.”