As Canadian markets continue to grapple with tighter liquidity and increased credit risk, investment managers are reevaluating their allocations in turn. While Canadian markets have a conservative reputation, driven largely by resources, close observers know that capital markets are making a likely long-term shift into asymmetry and volatility. American-style hedge funds, such as Anson Funds in Toronto, are finding more fertile ground by offering a more flexible, research-driven approach to investors.
The Canadian equity market has seen a notable pullback in retail participation over the last year, particularly in speculative sectors like junior mining, cannabis, and blockchain. After a period of pandemic-fueled liquidity and promotional hype, these industries are undergoing sharp corrections.
Firms like Anson Funds, led by Chief Investment Officer Moez Kassam, understand these kinds of cycles. Their focus on long-short investment strategies allows them to explore opportunities from regulatory arbitrage and governance breakdowns, while the pressures stemming from the Canadian credit market and high policy rates bring volatility to company valuations. Real estate investment trusts, mortgage investment corporations (MICs), and growth-stage tech firms that leaned on convertible debt are now contending with steeper capital costs and constrained investor appetites. This has triggered a growing interest from opportunistic funds looking to deploy capital into distressed or mispriced credit.
In these markets, timing is everything. Canadian credit markets typically lag their U.S. counterparts in both distress and recovery, which provides research-heavy investors more time to build conviction. For example, while U.S. high-yield spreads began widening aggressively in early 2024, the Canadian response was slower and less uniform, creating selective opportunities for funds with patience and precision.
Anson’s multi-pronged approach, which includes equity activism and special situations alongside long-short equity and credit exposure, positions it to have the ability to capitalize on this fragmentation. In recent years, the firm has built positions in Canadian-listed companies facing internal or structural inefficiencies, sometimes pushing for executive changes or asset spinoffs. Its campaign at Twilio (NYSE: TWLO), for instance, saw an active engagement strategy that culminated in the CEO’s ouster and a substantial equity revaluation.
While large-cap names in Canada remain tightly held and slow to change, the small-and mid-cap universe is still responsive to shareholder pressure, especially when liquidity dries up and capital becomes a strategic asset in itself. For investment firms willing to take public positions and apply activist pressure, the Canadian market offers more latitude than many of its G7 peers.
As global hedge funds consolidate in the U.S. and Europe, Canada has lacked a dominant domestic hedge fund presence, creating room for mid-sized, agile firms to attract talent from banks, global funds, and elite universities. Firms like Anson have been able to recruit analysts and portfolio managers, creating internal teams that can run deep-dive strategies across sectors and asset classes.
For investment managers, Canada presents an unusually attractive environment, and Anson Funds‘ evolution over the last decade reflects this shift. In the coming year, as capital searches for less correlated strategies, Canada’s public markets may offer a path for firms that know where to look.
Himani Verma is a seasoned content writer and SEO expert, with experience in digital media. She has held various senior writing positions at enterprises like CloudTDMS (Synthetic Data Factory), Barrownz Group, and ATZA. Himani has also been Editorial Writer at Hindustan Time, a leading Indian English language news platform. She excels in content creation, proofreading, and editing, ensuring that every piece is polished and impactful. Her expertise in crafting SEO-friendly content for multiple verticals of businesses, including technology, healthcare, finance, sports, innovation, and more.
