What Can You Expect in 2013?

Transcription

1 MONTHLY REVIEW OF HEDGE FUNDS & ALTERNATIVE INVESTING FEBRUARY 2013 VOLUME 13 ISSUE 2 Hedge Fund Industry Outlook: What Can You Expect in 2013? SURVEY OF ALLOCATORS INVESTMENT TRENDS AIMA CANADA TAKES TO THE SLOPES THE STATE OF THE INTERNATIONAL HEDGE FUND INDUSTRY

2 In step with market needs kpmg.ca 80% Agree that the demands of regulatory Have compliance have increased since % had to increase staff headcount Say in order to increase transparency. 88% investors have become more demanding in terms of due diligence since AIMA and KPMG have teamed up and conducted quantitative and qualitative research with 150 hedge fund managers around the world over the period from October 2011 to February The results of this survey indicate that the changes brought on by the institutionalization of the alternative fund industry have been underestimated. KPMG is focused on providing informed perspectives to help navigate challenge and take advantage of opportunity from value creation to realization keeping in step with market needs. PETER HAYES Partner, National Director, Alternative Investments T: E: JAMES LOEWEN Partner, National Asset Management Leader T: E: 2012 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms

3 Hedge fund allocations may triple in 2013 New allocations to hedge funds may more than triple this year, pushing the global industry s assets to a new high, according to an annual survey by Deutsche Bank AG. (DBK) Hedge fund assets worldwide may increase 11 percent to $2.5 trillion by year-end, according to the survey by the Germany s largest bank. Investors indicated they will add $123 billion of capital to the industry, in addition to investment returns that are expected to boost assets by $169 billion, the Frankfurt- based bank said. Hedge funds are forecast to draw more net deposits as investors, especially institutions, pursue more stable returns with low correlation with other assets such as stocks and bonds, the report showed. The $2.3 trillion global industry gained an average 6 percent last year, taking in $34.4 billion of net inflows, according to Chicago-based data provider Hedge Fund Research Inc. Overall, 2013 looks to be promising for the industry, authors led by Marlin Naidoo, who heads the bank s hedge fund capital group for Americas, wrote in the report. Those hedge funds that are able to post consistent returns year after year are emerging as an attractive option for investors looking for both better risk-adjusted returns and capital preservation. About 62 percent of the investors said they expect their hedge fund holdings to increase this year, compared with 42 percent whose allocations increased in 2012, the survey showed. Carl Berg, managing partner of Catalyst Financial Partners, in collaboration with Susan Weerts, contributor at Seekingalpha, published The Survey of Allocators Investment Trends. The report explores the trends within the hedge fund industry and assesses how compelling hedge funds are across different financial products. Based on feedback from over 50 allocators, the report shows that in 2013, an allocator is ready and willing to invest with an institutional quality hedge fund if it is providing portfolio benefits, decent but not necessarily top - performance, at attractive fee levels and terms. If those criteria are not fulfilled, allocators may look at substitutes, notably Private Equity, ETFs and mutual funds, or Direct investments. Conversely, allocators are thus less and less likely to invest into funds that have unconvincing performance or style drift, small hedge funds lacking an institutional framework, or funds (of any size) that refuse to review fees. Going into 2013, L/S Equity looks like the preferred allocation destination within the hedge fund space, followed by Emerging Markets and Credit & Fixed Income. Carl Berg and Susan Weerts argue that this signals a return to more risky assets, as Emerging Markets have particularly been out of favor the last months. As confidence continues to rebound in hedge fund investments, it will be interesting to see whether investments with emerging managers will yield the abnormal returns anticipated by wealth managers considering them as part of their portfolio, or whether their more experienced or established counterparts will continue to take the lead. I want to take this opportunity to thank James Burron, AIMA Canada and Barry Francis, Francis Communications for allowing me the opportunity to meet Andrew Baker, Chief Executive Officer of AIMA during his recent brief visit to Canada. The interview begins on page 10 of this issue. Terry Krowtowski Canadian Hedge Watch Inc. Volume 13 Issue 2 - February 2013

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5 Performance Summary January 2013 YTD MONTHLY REVIEW OF HEDGE FUNDS & ALTERNATIVE INVESTING FEBRUARY 2013 VOLUME 13 I SSUE 2 Editorial and Sales Editor Terry Krowtowski Sales Director Judy Street Art Director Vic Finucci Online Developer Ferenc Schneman Contact Information Canadian Hedge Watch Inc. 20 Toronto St., Suite 820, Toronto, Ontario M5C 2B8 tel: toll free: fax: Media, Advertising & Editorial: [email protected] Subscriptions: [email protected] Canadian Hedge Watch is published 11 times per year by Canadian Hedge Watch Inc. We welcome articles, suggestions and comments from our readers. All submissions become the property of Canadian Hedge Watch Inc., which reserves the right to exercise editorial control in accordance with its policies and educational goals. Disclaimer Canadian Hedge Watch (CHW) presents news, information and data on both Canadian and Global alternative investment activity. The information presented is not to be taken as an endorsement, investment advice or a promotion for the organizations and individuals whose material and information appears in this CHW publication or on the Canadian Hedge Watch website. The material presented, separate from paid advertisements, is for the sole purpose of providing industry-specific information. As with all areas of financial investing, CHW recommends strongly that readers should exercise due diligence by consulting with their investment advisor or other trusted financial professional before taking any action based upon the information presented within these pages. CHW HEDGE FUND INDICES (CHW-HF) % % CHW-HF Composite Index CHW-HF Equity Hedged Index CHW-HF Notes Index CHW-FOHF Index Scotia Capital Canadian Hedge Fund Performance Index SC CDN HF Index Asset Weighted SC CDN HF Index Equal Weighted Dow Jones Credit Suisse Hedge Fund Indices Dow Jones Credit Suisse Core Hedge Fund Index Convertible Arbitrage Emerging Markets Event Driven Fixed Income Arbitrage Global Macro Long/Short Equity Managed Futures HEDGE FUND INDICES Hennessee Hedge Fund Index HFRI Fund Weighted Composite Index HFRI Equity Market Neutral Index HFRI Fund of Funds Composite Index MARKET INDICES Dow Jones Global Index (C$) Dow Jones Global Index (U$) Dow Jones 30 Industrial Average (US$) NASDAQ Composite Index (C$) NASDAQ Composite Index (US$) S&P 500 Total Return Index (C$) S&P 500 Total Return Index (US$) S&P/TSX Composite Index Total Return Volume 13 Issue 2 - February

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7 C O N T E N T S F E B R U A R Y Hedge Fund Industry Outlook: 4 What can you Expect in 2013? Deborah Prutzman, Regulatory Fundamentals Group Mary Beth Hamilton, Eze Castle Integration AIMA Canada Takes to the Slopes 6 Survey of Allocators Investment Trends 8 Carl Berg, Catalyst Financial Partners Susan Weerts The State of the International 10 Hedge Fund Industry CHW Interviews Andrew Baker, CEO of AIMA Business Insider - 13 Money Game Chart of the Day Hedge Fund Performance Tables Calendar of Events 22 Announcements 29 Volume 13 Issue 2 - February

8 Hedge Fund Industry Outlook: What can you Expect in 2013? Insights from a recently hosted webinar on the Hedge Fund Industry Outlook for Speakers, Deborah Prutzman, CEO of the Regulatory Fundamentals Group, and Mary Beth Hamilton, Vice President of Marketing for Eze Castle Integration, recently hosted a webinar on the Hedge Fund Industry Outlook for Following is a recap of the key topics discussed around operational due diligence, regulations and technology trends. Insights from Deborah Prutzman, Regulatory Fundamentals Group 2012 was a year marked with significant regulatory changes in the world of investment management. So far, we re expecting to see more of the same in This time, the direction and manner of change will likely be more predictable. Some important themes we expect will permeate throughout the year include: A need for trust A focus on governance Pensions searching for yield Central counterparty risks An arms race between regulators A need to focus on supervisory processes around marketing External Factors Driving Change in 2013 As always, investors are hungry for yield, but they are smarter now thanks to lessons learned in the post-madoff era. This year, the typical investor that invests in alternatives is changing. We expect the importance of institutional investors to increase, while pension funds and endowments start to seek greater allocations. Deborah Prutzman CEO Regulatory Fundamentals Group So, what does this mean? First and foremost, we ll see an increased focus on operational due diligence amongst hedge funds. Additionally, this will raise the stakes for asset managers. If word gets out to the media that a high net worth individual lost money in a questionable investment scenario, the media and the public will not see this favorably. But, if a teachers union or group of nurses loses pension funds, there will likely be far greater backlash. Major Changes to Look For 2013 is likely going to be the year of regulatory enforcement in the alternatives industry. We re seeing that the regulatory bodies that govern this space are especially invigorated right now. The SEC has a new Asset Management Unit in place, and is changing its approach to focus more on conflicts, human motivation and deep knowledge of the industry. We expect much of the same at the CFTC as well. Other US regulators, such as the FERC (Federal Energy Regulatory Committee) and state governance groups will start to play a more influential role this year as well. Mary Beth Hamilton Vice President of Marketing Eze Castle Integration 4

9 Another change to look for is the tendency for regulators to focus on the personal liability of firms senior management. The media is applying pressure to the industry to hold these executives accountable for the inner workings of their funds, and popular belief is they should be taking a more supervisory role going forward. In 2012, we began to see increased litigation coming from the investor base and we believe this will continue to grow, especially as the whistleblower phenomenon gains momentum. Last year, the SEC received 3,000 tips from whistleblowers (about 8 per day) a number that is expected to increase in What Adjustments Should You Make? Develop an enterprise-wide understanding of needs as they pertain to the firm s strategy, governance, operations and technology. Requirements should be innately built into the firm, using clear governance and strong policies. As a best practice, we recommend the following framework for governance: 1. Perform a comprehensive risk assessment. 2. Implement a process for initiating business changes and new activities. 3. Implement a process for monitoring for external environmental changes (such as taxes, laws, best practices, etc.) 4. Ensure your staff has a clear understanding of expectations. This will result in a more mature, agile fund that is in a better position to navigate the tough competitive environment and upcoming regulatory changes. Insights from Mary Beth Hamilton, Eze Castle Integration DR & BCP In the Spotlight Recent events have tested the preparedness of firms across the United States and internationally. From the London Olympics and summer power failures to Hurricane Sandy and the recent flu season concerns, the need for well thought out DR and BCP is pretty clear. It is important to note that each of the scenarios above impact a business in different ways and, highlight the importance of conducting thorough risk analysis and scenario planning when developing a disaster recovery and business continuity plan. It is important to think through the different types of scenarios that can impact your firm. Movement to the Cloud Adoption of cloud services by hedge funds and alternative investment firms continues to increase at a rapid rate. Eze Castle estimates that 40% of our clients are using some sort of cloud service. A 2012 independent cloud market survey found that nearly 8 in 10 hedge funds & investment management firms are using the cloud for at least some of their IT infrastructure or application needs. Navigating the BYOD Trend Today, the acronym BYOD is becoming common place amongst professionals responsible for overseeing a firm s IT functions. After resisting it for years, firms are starting to recognize that by allowing employees to bring their own devices they can experience potential cost savings, productivity increases and make some employees a little bit happier. A survey by Good Technology found that 90% of financial organizations support the use of personal mobile devices at work. It also found that the most popular model for BYOD at financial institutions is for employees to purchase and pay for their own device with the company offering support in the form of access to corporate systems. The next-most popular is a model where the enterprise reimburses users for "eligible expenses" up to a point The prevalence of employees bringing their own devices also has implications on corporate security and policies. Hedge funds need to be thoughtful about their policies and ensure employees are knowledgeable about responsible practices. More Resources Here are some additional sources of (free!) information to help you stay up-to-date on the latest in hedge fund regulations: Eze Castle s Hedge Fund Regulations Knowledge Center Regulatory Fundamentals Group s Regulations Simplified Blog regfg.com/blog/governance/rfg-white-paper-the-unaskedquestion-fund-directors-worth-it-or-not/ To hear the complete presentation, be sure to view the webinar, Hedge Fund Industry Outlook: Trending Topics for html Deborah Prutzman is the founder and CEO of Regulatory Fundamentals Group, which delivers an intuitive web-based platform to keep investment firms up-to-date on regulatory changes and other issues that must be addressed head-on, while building an enterprise risk management structure that meets the expectations of investors, regulators and senior management. Deborah has a deep background in the domestic and international financial services industry and is experienced in regulatory risk management and corporate governance. For more information, visit Mary Beth Hamilton is vice president of marketing for Eze Castle Integration, a leading provider of IT and cloud computing services, technology and consulting to hedge funds and alternative investment firms. Mary Beth has over a decade of technology and marketing experience and holds an MBA from Boston College. For more information on Eze Castle Integration, visit The key reasons firms are moving to the cloud are: To reduce IT infrastructure investment/costs (transfer from CapEx to OpEx) To increase the speed of technology deployment To simplify IT management and support To improve IT flexibility and scalability of on-demand resources To take advantage of built-in disaster recovery and business continuity features and functionality Volume 13 Issue 2 - February

10 AIMA Canada Takes to the Slopes More than 60 AIMA Canada members and guests took to the slopes January 31 st at Osler Bluff Ski Club The full-day event was organized by AIMA Canada s Events Committee as a fun day and member networking opportunity. Co-sponsored by CIBC, CIBC Mellon and KPMG, It featured everything from lessons for beginners to a Giant Slalom competition for more advanced skiers and the usual après ski festivities which featured prize presentations to just about everyone. The day featured some interesting sights on the various ski runs, including a group of mystery skiers in fat suits (who may or may not have been AIMA members in disguise). The event was arranged by Osler member and AIMA Canada Deputy Chair Andrew Doman, ably supported by organizers Claire Van Wyk, Laura Szekely, Mykal Johncox and COO James Burron and AIMA s current co-op student Lisa Miranda. Also supporting the arrangements were AIMA Canada Chair Gary Ostoich and Executive Committee members Paul Patterson and Chris Pitts. All in all, it was a great day for the organization which will be celebrating the tenth anniversary of its founding with a gala event this April. in Collingwood for AIMA s 4 th annual Ontario Ski Day. Andrew Doman with Claire Van Wyk (left) and Lisa Miranda. 6

11 Gary Ostoich (left) with Chris Pitts and Donna Beasant Skiers arrive at Osler. It takes all kinds! Tackling the slalom course. Guess who? Skiers relax between runs. Andrew Doman congratulates John Middleton on his outstanding slalom form. Jody Brison and Wendy Chen enjoy last few minutes before hitting the slopes. Volume 13 Issue 2 - February

12 Survey of Allocators Investment Trends In the last couple of years broadsides have been fired at the hedge fund industry in the form of industry criticism. Scope of Survey In the last couple of years broadsides have been fired at the hedge fund industry in the form of industry criticism, competitive external and internal pressures, meager returns, and difficult markets. We now wanted to take the pulse of what allocators currently think of the industry. We think this survey is especially interesting, since it not only explores trends within the hedge fund industry, but also investigates how compelling hedge funds are across different financial products. We made a similar survey in May 2010 ( A View from Both Sides: the Latest Trends in Capital Raising ), and we compare some of those answers with this survey to see changes through time. Executive Summary In summary, in 2013 an allocator is ready and willing to invest with an institutional quality hedge fund if it is providing portfolio benefits, decent - but not necessarily top - performance, at attractive fee levels and terms. If these criteria are not fulfilled allocators may look at substitutes, notably Private Equity, ETFs and mutual funds, or Direct investments. Going into 2013, within the hedge fund space, L/S Equity looks like the preferred allocation destination, followed by Emerging Markets and Credit & Fixed Income. This signals a return to more risky assets as Emerging Markets have particularly been out of favor the last months. Carl Berg Catalyst Financial Partners 45% 40% Survey Results 1. In 2013, would you consider allocating to hedge funds? 35% 30% 25% 20% 15% 10% 5% 0% YES, now should be a good time YES, but only if we find PERHAPS, but we'll wait the appropriate manager and see how the year develops NO, too much admin, high fees and risks involved NO, we have been disappointed by the industry Susan Weerts Contributor Seekingalpha Allocation appetite appears strong. Most of the allocators indicate that they are looking to make investments to hedge funds. Only a small portion of the investors takes a wait and see approach. However, no investors (of the group surveyed) dismiss hedge funds outright. 8

13 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2. Within the hedge fund space, what sectors do you think would be especially interesting in 2013? L/S Equity Emerging Markets Credit & Fixed Income Event Driven Mortgage Macro Commodities, Energy Quant & CTAs Trade Finance 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 5. What is the consideration that discourages you most in investing in hedge funds? Too High fees, Unfriendly Investor Terms Lackluster Performance Difficulty in Selecting the 'Right' Manager There Are Other, More Appealing Investment Opportunities Currently allocators top preference is L/S Equity strategies. This sentiment follows the current opinion that the equity markets look favorable in 2013, on the back of less systemic risks worldwide, rebounding real estate in the US, and a stronger China. More surprisingly, Emerging Markets come in second place. This signals a return to more risky assets as Emerging Markets have been out of favor the last months. In our 2010 survey, Event Driven strategies were allocators top choice. Investors rotate their exposures to the flavor of the year. 3. What other investment opportunities would you consider, if unwilling or unable to consider hedge funds? 30% 25% 20% 15% 10% 5% 0% Private Equity Funds ETFs and Mutual Funds Direct Investments in Equity / Debt Real Estate Funds 'Public' Hedge Funds Cash Private Equity is the most attractive investment substitute to hedge funds. ETFs and mutual funds are also an attractive substitute to hedge funds. These products bring passive beta exposure, with lower fees and less stringent investor terms than hedge funds. Direct Investments are becoming a common substitute. The fact that allocators are becoming big investors of Directs will have implications for hedge funds, since it might circumvent their intermediary function. 60% 50% 40% 30% 20% 10% 0% 4. What is the most important criterion for a hedge fund that you would consider investing in? Portfolio Characteristics Meaningful Performance Appropriate AUM Size Star Management Team Long Track-record Portfolio Characteristics (non-correlation, diversification, etc) is the top reason to allocate to hedge funds. Investors seem more interested in how a product fits in their portfolio and core investment objective than the strategy itself. The performance of hedge funds is the second top reason. Low Fees and Attractive Terms In 2010, high absolute fund performance was the top reason for investors to allocate to hedge funds. High fees and unfriendly investor terms keep allocators at bay. After some years of a lot of scrutiny and media publicity, high fees are the top reason for allocators to back away from allocating to hedge funds. About 15% of respondents thought there are other, more appealing, investment opportunities than hedge funds. In our 2010 survey, identifying the Right manager was allocators top discouraging factor. Too high fees trailed far down the list of concerns in What type of allocators participated in the survey? Over 1,000 allocators were sent the survey, of which 52 answered it between January 10-16th, The largest groups of responders were fund-offunds and family offices. Eight types of allocators responded. There were no analysis made on the basis of allocator type; the survey responders were anonymous and the answers aggregated. Other Inst. Investor 10% Wealth Manager 10% Endowment 7% HNW Individual 6% Investor Consultant 10% Pension Fund 3% Fund-of-funds 27% Single/ multifamily office 27% Conclusion The laundry list for a hedge fund to be successful is not actually that long: run a quality institutional investment firm, make sure it provides benefits in allocators portfolio analysis, limit draw downs while producing decent performance, and all this at favorable terms and fees. At different stages of a fund s growth, however, at least one of these parameters tend to fall short. Smaller funds often struggle in providing the necessary institutional frame work, while larger funds refuse to negotiate fees, and most funds are susceptible to unconvincing performance or style drift. In the past year, we think, the development has been in the direction for investors and managers to understand what works for each party, which bodes for better prospects for industry participants alike. Carl Berg runs Catalyst Financial Partners, a specialist investor events firm for the alternative investing industry. The firm links alternative investment managers and investors together through investor events. He also works with selected alternative investment firms in a capital raising capacity. Susan Weerts is a contributing writer to Seekingalpha.com since Current research areas are strategic trading games on ETF and its underlying index, market-neutral L/S strategy. She is also a consultant on China-related business. This survey is copyright Catalyst Financial Partners but we accept that the survey is being linked to or quoted as long as you refer to the source. For any comments or questions contact: Catalyst Financial Partners LLC 118 E 28th Street, Suite 314 New York, NY T: E: [email protected] Volume 13 Issue 2 - February

14 The State of the International Hedge Fund Industry Canadian HedgeWatch took the opportunity to discuss the state of the international hedge fund industry with Andrew Baker, Chief Executive Officer of the Alternative Investment Management Association (AIMA), during his recent visit to Canada. Mr. Baker was appointed AIMA CEO in Based in the organization s London headquarters, Mr. Baker brings to his position an extensive background of experience CHW Can you discuss the size, objectives and international scope of the international AIMA organization? Andrew Baker Founded in 1990, the Alternative Investment Management Association (AIMA) is the global representative of the hedge fund industry. We represent all practitioners in the alternative investment management industry including hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms, investors, fund administrators and independent fund directors. Our membership is corporate and comprises over 1,300 firms (with over 6,000 individual contacts) in more than 50 countries who all benefit from our active influence in policy development, our leadership in industry initiatives and our outstanding reputation with regulators. We represent the global hedge fund industry at national and international levels in ongoing discussions about the future regulatory framework for the industry. Our focus on education, regulation, policy development and sound practices has resulted in a substantial body of work used around the world by members, institutional investors, policymakers and supervisors. We are committed to developing industry skills and education standards, and we are a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) the industry s first and only specialised educational standard for alternative investment specialists. CHW Having served in the CEO role for four years now, can you outline your original goals for the organization and give us your thoughts on the progress made to date against those goals? AB The global financial crisis convinced me that AIMA needed to transform the work it does on behalf of the industry around the world. It was clear that there would be a wave of new laws and regulations introduced internationally, some designed to regulate hedge fund managers, others to regulate the markets our manager members operate in, others the taxes that are applied to them. The world has changed, and so has AIMA. We have built new structures and brought in new people to address these challenges. We are very much more active now than ever before in advocacy on behalf of the industry, whether with the policymakers or regulators or other important audiences like the press or investors. We have also used the expertise of our members in unprecedented numbers through their contributions to our many working groups, for which we are enormously grateful. All this work has delivered significant real results for the industry. Our diligent, patient and sustained engagement on the major pieces of regulation internationally and our willingness to engage constructively with the authorities in order to explain the industry s concerns, has helped to influence key outcomes within the whole process. Much of the regulation impacting the industry globally is no longer as damaging as it was when first proposed. Outcomes such as these are a testimony to the work of our staff, members and volunteers and the relationships they have built up. in international finance and investments. 10

15 CHW AIMA Canada, the Canada national group of the international AIMA organization, will celebrate the tenth anniversary of its founding this spring. How would you assess the development of AIMA Canada to date? AB AIMA Canada s development has been very impressive. It has grown rapidly since its founding in 2003 and currently has approximately 100 corporate members across the country. AIMA Canada has been very active on many fronts, including developing and promoting sound practices, enhancing industry transparency and education, and liaising with the wider financial community, institutional investors, the media, regulators, governments and other policymakers. CHW Can you comment on the nature and relative growth of the hedge fund industry in Canada? AB We have seen significant growth in both the number of funds and variety of strategies being traded within Canada over the past few years. There has also been a good deal of growth in AUM during this period. Canadian fund managers currently manage over $30 billion, up from about $12 billion just five years ago. CHW Over the past two years, AIMA Canada has established regional committees in Quebec, Alberta and B.C. Is this regional approach a common practice with other AIMA national groups? AB Given Canada s geography, its distinct regional markets and its provincial regulation, it made sense to take this regional approach. This set up is unique in the international AIMA organization. CHW Can you tell us how AIMA has worked with regulators in the EU to provide input and represent member views on the development of the Alternative Investment Fund Managers Directive (AIFMD) which governs access to EU investors by non-eu fund managers? AB AIMA, as the global hedge fund association, has engaged intensively and constructively with European and international policymakers on the Directive since the original draft was published by the European Commission in At the time of the publication of that original draft, we stressed that we supported much of the Directive, particularly those provisions relating to transparency and involving the registration of managers and their reporting of systemic data to supervisors in the interests of financial stability assessment in line with the G20 consensus. However we also expressed grave reservations about some of its content. There were many provisions that would have negatively impacted both the alternative asset management industry globally and also European investors. Since then there has been considerable progress and a significant amount of ground has been covered. The final text of the Directive that has now been agreed by the European Commission is a considerable improvement not only for our members globally but in terms of its impact on investors. Our focus has now shifted to the implementation of the Directive. As you know, the AIFMD is a complicated piece of legislation. It is being implemented in EU Member States in a variety of different ways, while non-eu or third country jurisdictions are also taking differing approaches to it. This leaves hedge fund firms across the world facing a lot of complex choices. Even now, the full legal and regulatory framework for the AIFMD has not been fully finalized. But the industry needs to start its implementation efforts now - since the sooner one starts, the less costly it will be in the end. CHW AIMA recently launched an on-line self-diagnostic tool and detailed guide to implementation for firms needing to comply with the EU Directive (AIFMD). Can you comment on the importance of this tool to international managers and how it works? AB We think it will be a very important tool for international managers as they begin or continue to market their funds to investors in EU countries. The diagnostic tool and implementation guide, which was jointly produced by AIMA and the professional services firm PwC, will assist AIMA member firms in preparing for, and tracking, their compliance readiness. The guide outlines the various strategic and business options both EU and non-eu managers should consider when planning for compliance with the directive. It is supplemented by an online selfdiagnostic tool that will assist managers as they approach the July 2013 implementation deadline. We hope that these tools will enable hedge fund firms to get a better sense of the steps that they will need to take in order to respond to and comply with the provisions of the AIFMD. CHW Looking ahead, what do you see as the biggest issue facing the international hedge fund industry? AB The years ahead will present another set of challenges for the industry. Clearly, performance has always been, and will continue to be, key. The industry will continue to evolve, mature and become more institutionalised. There will always be a tremendous need for the kind of sound-practice guides and due diligence questionnaires for which AIMA is rightly lauded. But for AIMA, advocacy continues to be our priority is likely to be even busier than 2012 in terms of workload. We are at the end of the beginning, not the beginning of the end, of the regulatory changes that will impact the industry. AIFMD, FATCA, shadow banking and many other reforms will require extensive engagement with policymakers and supervisors. AIMA will also be moving increasingly from seeking to achieve better outcomes for the industry during the drafting stage of regulation to helping our members with the necessary implementation to comply with the final text of that regulation. Because we have been working on these proposals since they were first put forward, we understand the intent and detail of these new regulations, and we will be producing new tools and services to help our members comply with and interpret them. Andrew Baker is the Chief Executive Officer of AIMA. Prior to joining AIMA he spent six years at Schroders in London where he was COO - Alternative Investments. Previously, Andrew held senior business management positions at Gartmore and UBS Asset Management after a fifteen year spell of managing institutional assets at HD International and N. M. Rothschild. In the early 1980s he spent two years on secondment at the Bank Of Papua New Guinea in Port Moresby. Andrew has a degree in Mathematics from Imperial College, London and is married with three children. Terry of Canadian Hedge Watch with Andrew Baker Volume 13 Issue 2 - February

16 CANADIAN exempt market canadianemwatch.com Watch exempt market canadianemwatch.com Keep up-to-date with the latest exempt market trends and products with the on-line (pdf) quarterly publication, Canadian EM Watch. C A NADIAN JANUARY 2013 V O L 3 ISSUE 1 Watch Will Canada Make Room For Crowdfunding? A magazine designed to promote the exempt market sector through industry-sourced articles from exempt market experts Comprehensive listing of current exempt market offerings For investors, advisors, financial planners and service providers Exempt markets are a great opportunity to diversify a traditional portfolio FINDING THE PERFECT FIRM YOUR OWN Canada housing still affordable! Visit canadianemwatch.com to get the latest news, reports and conference updates! Canadian EM Watch is produced by A division of CHW Inc. For more information, please contact: MEDIA, ADVERTISING & EDITORIAL x2225 [email protected] SUBSCRIPTIONS [email protected]

17 BUSINESS INSIDER Money Game Chart of the Day Hedge Funds Have Lost Their Love For Gold After taking a cursory look at the recent 13-Fs filed by hedge funds, it became apparent that hedge funds were scaling back their exposures to gold. George Soros was among the big names that unloaded his position. According to Goldman Sachs new Hedge Fund Trend Monitor report, hedge funds in aggregate scaled back big time. Despite low turnover, hedge funds notably reduced holdings of underperforming long-time favorites Apple and gold while raising allocations to rallying Financials. For the first time in three years AAPL was not the top stock in our VIP list, instead ranking as the third most frequent top-10 holding. The stock fell 20% in 4Q and funds reduced positions by over 30%. Holdings in GLD were also lower than they have been in at least four years, equaling just 0.6% of long positions as the ETF fell 6% in price. Volume 13 Issue 2 - February

18 H E D G E F U N D P E R F O R M A N C E (as of January 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. (3 Year) Worst 6 Mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Beta TSX) Alpha (%) TSX) Correl. TSX) Correl. S&P500) % High Watermark % Pos. Since Inc. Acorn Diversified Program Act II New Media Fund A Act II New Media Fund Class U Act II New Media Fund F Agilith North American Diversified Fund AlphaNorth Growth Fund Series A AlphaNorth Partners Fund Class A Amethyst Arbitrage Fund Arrow Diversified Fund Class A Arrow Diversified Fund Class A U$ Arrow Diversified Fund Class F C$ Arrow Diversified Fund Class F U$ Aurion II Equity Fund Aurion II Equity Fund Series D Aurion Income Opportunities Fund Aurion Income Opportunities Fund Class D Auspice Diversified Trust Class A Auspice Diversified Trust Class S Auspice Managed Futures LP Barometer Long Short Equity Pool Class A Barometer Tactical Exchange Traded Fund Pool Blackheath Futures Fund Class A Blackheath Volatility Arbitrage Fund Class A BluMont Hirsch Performance Fund Broadview Dark Horse LP Brompton Energy Opportunities Fund Series Brompton Energy Opportunities Fund Series Brompton Energy Opportunities Fund Series A BSP Absolute Return Fund L/S Eq. US$ BSP Absolute Return Fund Multi Strat.US$ BT Global Growth Fund L.P Burlington Partners Plus LP Burlington Partners1 LP Calrossie Partners Fund ChapelGate Credit Opportunity Fund Ltd CI Global Opportunities Fund C$ CI Global Opportunities Fund U$ Curvature Market Neutral Fund A DKAM Capital Ideas Fund Dynamic Alpha Performance Fund Series A Dynamic Alpha Performance Fund Series F Dynamic Alpha Performance Fund Series FH U$ Dynamic Alpha Performance Fund Series H Dynamic Alpha Performance Fund Series T Dynamic Contrarian Fund Dynamic Income Opportunities Fund Dynamic Power Emerging Markets Fund Series A Dynamic Power Emerging Markets Fund Series C Dynamic Power Hedge Fund Series C Enso Global Fund A

19 H E D G E F U N D P E R F O R M A N C E (as of January 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. (3 Year) Worst 6 Mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Beta TSX) Alpha (%) TSX) Correl. TSX) Correl. S&P500) % High Watermark % Pos. Since Inc. Enso Global Fund Class U Enso Global Fund F Exemplar Diversified Portfolio Series A Exemplar Diversified Portfolio Series F Exemplar Leaders Fund Series A Exemplar Leaders Fund Series F Fairlane A Plus Bond Hedged Fund Fiera Global Macro Fund Class A Fiera Global Macro Fund Class F Fiera Long Short Equity Fund Class A Fiera Market Neutral Equity Fund Class A Fiera Market Neutral Equity Fund Class F Fiera Tactical Bond Yield Fund Class A Formula Growth Alpha II Fund Class B Formula Growth Global Opportunities Fund Cl. S C$ Formula Growth Hedge Fund Class F C$ Formula Growth Hedge Fund Class F U$ Friedberg Asset Allocation Fund Friedberg Global Macro Hedge Fund U$ Front Street Canadian Energy Resource Fund Ser B Front Street Canadian Energy Resource Fund Ser F Front Street Canadian Hedge Fund Series B Front Street Growth and Income Fund Series A (LL) FrontFour Opportunity Fund frontieralt Global Dividend Fund Garrison Hill Fund Series A Garrison Hill Fund Series A (Class G) US$ Garrison Hill Fund Series F Garrison Hill Macro Opportunities LP GFM 130/30 Fund GFM Dividend Income Fund GFM Market Neutral Fund Goodwood Fund Class A Goodwood Fund Class B Goodwood Value Fund A Goodwood Value Fund F High Yield Fund A C$ High Yield Fund A U$ High Yield Fund F Hillsdale Canadian Long/Short Equity Fund Class A Hillsdale Enhanced Income Fund Class A IA Multi-Strategy IMFC Global Concentrated Program IMFC Global Investment Program Inflection Strategic Opportunities Fund Series A JC Clark Focused Opportunities Fund (Class A) JC Clark Patriot Trust (Class B) JC Clark Preservation Trust (Class B) JM Catalyst Fund KCS Great White North Fund Class A Volume 13 Issue 2 - February

20 H E D G E F U N D P E R F O R M A N C E (as of January 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. (3 Year) Worst 6 Mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Beta TSX) Alpha (%) TSX) Correl. TSX) Correl. S&P500) % High Watermark % Pos. Since Inc. KCS Great White North Fund Class B KCS Great White North Fund Class F KCS Great White North Fund Class O Kensington Global Private Equity Fund Class E+G Kensington Hedge Fund 1 Series A+E+F King & Victoria Fund LP King & Victoria RSP Fund Class A Units Landry Morin Long Short Momentum Fund Series A Landry Morin Long Short Momentum Fund Series B Landry Morin Long Short Momentum Fund Series F Landry Morin Long Short Momentum Fund Series G Landry Morin Long Short Momentum Fund Series I Lightwater Conservative Long/Short - Class A Lycos Value Fund Class O Lycos Value Fund Class P Majestic Global Diversified Fund Majestic Global Diversified Fund Series A Majestic Global Diversified Fund Series I Man AHL Diversified (Canada) Fund Class A C$ Man AHL Diversified (Canada) Fund Class C C$ Man AHL Diversified (Canada) Fund Class F Man AHL Diversified (Canada) Fund Class I Man AHL Diversified Futures Ltd Man Canada AHL Alpha Fund Class A Man Canada AHL Alpha Fund Class F Man Canada AHL DP Investment Fund Class A Man Canada AHL DP Investment Fund Class B Man Canada AHL DP Investment Fund Class C Man Canada AHL DP Investment Fund Class D Man Canada AHL DP Investment Fund Class F Man Canada AHL DP Investment Fund Class G Man Canada AHL DP Investment Fund Class I Man Canada AHL DP Investment Fund Class O Man Canada AHL DP Investment Fund Class P Man Canada AHL DP Investment Fund Class Q Man Canada AHL DP Investment Fund Class R Man Canada AHL DP Investment Fund Class S Man Canada AHL DP Investment Fund Class T Marret High Yield Hedge LP Class B Meson Capital Partners Fund Milford Capital Growth Fund Niagara Discovery Fund Niagara Legacy Class B Fund Norrep Market Neutral Income Fund Northern Rivers Conservative Growth Fund LP Northern Rivers Global Energy Fund LP Northern Rivers Innovation RSP Fund Palos Income Fund, L.P Palos Majestic Commodity Fund LP Pathway Energy Series A Rollover MIN

21 H E D G E F U N D P E R F O R M A N C E (as of January 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. (3 Year) Worst 6 Mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Beta TSX) Alpha (%) TSX) Correl. TSX) Correl. S&P500) % High Watermark % Pos. Since Inc. Pathway Multi SF Explorer Series A Rollover MIN Performance Diversified Fund Trust Cl A Performance Growth Fund Class A Performance Growth Fund Trust Class A Picton Mahoney Diversified Strategies Fund Class A Picton Mahoney Global Long Short Equity Fd Cl A C$ Picton Mahoney Global Long Short Resource Cl A Picton Mahoney Global Market Netural Equ Cl A C$ Picton Mahoney Income Opportunities Fund Class A Picton Mahoney Long Short Equity Fund Class A Picton Mahoney Market Neutral Equity Fund Class A PIE Alternative Strategies Class F-1 Series A Primevestfund Radin Global Opportunities Fund Founders Class F RDA Mons Regalis Multi-Strategy LP Rosalind Capital Partners L.P Ross Smith Capital Investment Fund Ross Smith Opportunities Fund RPH Global Sovereign Bond Pooled Fund Salida Strategic Growth A (formerly Multi Strategy Salida Wealth Preservation Fund Class A SEI Futures Index Fund Class D SEI Futures Index Fund Class E SEI Futures Index Fund Class F SEI Futures Index Fund Class O SEI Futures Index Fund Class P Seven Seas Capital Appreciation Fund SG US Market Neutral Fund SG US Market Neutral Fund Class G SG US Market Neutral Fund Class U Sherpa Diversified Returns Fund Class A Sherpa Market Neutral Income Fund Class A Silvercove Hard Asset Fund L.P SMI Defensive LP SMI Income LP SMI Opportunities LP Spartan Eleven Fund Spartan Humber Global Opportunity Fund Spartan Multi Strategy Fund Class A Spartan Noble Bay Energy Fund Spartan Scale Opportunities Fund Spartan Teraz Fund Sprott Absolute Return Income Fund Class A Sprott Absolute Return Income Fund Class T Sprott Bull/Bear RSP Fund Class A Sprott Hedge Fund L.P. Class A Sprott Hedge Fund L.P. II Class A Sprott Opportunities Hedge Fund Class A Sprott Opportunities RSP Fund Sprott Small Cap Hedge Fund Volume 13 Issue 2 - February

22 H E D G E F U N D P E R F O R M A N C E (as of January 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. (3 Year) Worst 6 Mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Beta TSX) Alpha (%) TSX) Correl. TSX) Correl. S&P500) % High Watermark % Pos. Since Inc. SW8 Strategy Fund LP Class A SW8 Strategy Fund LP Class B SW8 Strategy Trust Class A SW8 Strategy Trust Class B Tapestry Balanced Growth Private Port Corp Cl A Tapestry Balanced Growth Private Port Corp Cl T Tapestry Balanced Income Private Port Corp Cl A Tapestry Balanced Income Private Port Corp Cl T Tapestry Divers Income Private Port Corp Class A Tapestry Divers Income Private Port Corp Class T Tapestry Global Balanced Private Port Corp Cl A Tapestry Global Balanced Private Port Corp Cl T Tapestry Global Growth Private Port Corp Cl A Tapestry Global Growth Private Port Corp Cl T Tapestry Growth Private Portfolio Corporate Cl A Tapestry Growth Private Portfolio Corporate Cl T The Friedberg Currency Fund Topaz Multi-Startegy Fund (Canada) Series H Trident Global Opportunities Fund C$ Trident Global Opportunities Fund U$ Trident Performance Corp II U.S. Equity Income Fund A C$ U.S. Equity Income Fund Class U U$ U.S. Equity Income Fund F Venator Founders Fund Class A Venator Income Fund Class A Vertex Fund Class A 1, Vertex Fund Class B Vertex Fund Class F Vision Opportunity Fund L.P Vision Opportunity Fund L.P. II Vision Opportunity Fund Trust WARATAH Income Fund WARATAH One Fund WARATAH Performance Fund Wealhouse Panorama Fund, L.P Wolverine Opportunity Fund Series A Equally Weighted Average Performance of All Funds 7, Number of Funds in Sample Canadian Hedge Watch receives, tracks and presents the data and results of Canadian funds as a service to the hedge fund and alternative investment community. Business announcements, key personnel appointments and press releases are also welcome for publication. Please send to [email protected]. To ensure the highest level of accuracy, Hedge Funds are encouraged to directly submit monthly/quarterly/annual data to: [email protected] 18

23 M A R K E T I N D I C E S (as of January ) INDEX NAME YTD 1 Year 3 Year Since Inception Best 6mo. (3 Year) Worst 6mo. (3 Year) Max. Draw Down Std. (1 Year) Std. (3 Year) Alpha TSX) Beta TSX) % High Watermark % Pos. s 183 Day Canada T-Bill Day Canada T-Bill BMO Canadian Small Cap Index CHW-HF Composite Index CHW-HF Equity Hedged Index CHW-HF FoHF Index CHW-HF Notes Index Dow Jones Global Index (C$) Dow Jones Global Index (U$) Nasdaq Composite Index (C$) S&P 500 Total Return Index C$ S&P 500 Total Return Index US$ S&P/TSX 60 Index TR S&P/TSX Composite Index Volume 13 Issue 2 - February

24 Highest Return (3 ) Fund Name Year Ann. std (1 Year) Agilith North American Diversified Fund King & Victoria RSP Fund Class A Units King & Victoria Fund LP Formula Growth Global Opportunities Fund Cl. S C$ Exemplar Leaders Fund Series F Radin Global Opportunities Fund Founders Class F Formula Growth Hedge Fund Class F U$ Formula Growth Hedge Fund Class F C$ Rosalind Capital Partners L.P JC Clark Preservation Trust (Class B) Formula Growth Alpha II Fund Class B frontieralt Global Dividend Fund Calrossie Partners Fund SMI Income LP WARATAH Performance Fund Picton Mahoney Global Long Short Equity Fd Cl A C$ FrontFour Opportunity Fund Tapestry Global Growth Private Port Corp Cl A Tapestry Global Growth Private Port Corp Cl T JC Clark Focused Opportunities Fund (Class A) DKAM Capital Ideas Fund Fund Name Highest Return (1 Year) Ann. Return Ann. Std. # of Negative s SMI Opportunities LP Agilith North American Diversified Fund King & Victoria Fund LP King & Victoria RSP Fund Class A Units Venator Founders Fund Class A ChapelGate Credit Opportunity Fund Ltd Blackheath Volatility Arbitrage Fund Class A Burlington Partners Plus LP Vision Opportunity Fund Trust JC Clark Focused Opportunities Fund (Class A) Vision Opportunity Fund L.P Vision Opportunity Fund L.P. II Venator Income Fund Class A Calrossie Partners Fund JC Clark Preservation Trust (Class B) Friedberg Global Macro Hedge Fund U$ Formula Growth Global Opportunities Fund Cl. S C$ Inflection Strategic Opportunities Fund Series A FrontFour Opportunity Fund Formula Growth Alpha II Fund Class B Niagara Legacy Class B Fund Lowest Return (3 ) Fund Name Year Ann. std (1 Year) Salida Strategic Growth A (formerly Multi Strategy Sprott Hedge Fund L.P. II Class A Sprott Bull/Bear RSP Fund Class A Sprott Hedge Fund L.P. Class A Front Street Canadian Energy Resource Fund Ser B Northern Rivers Innovation RSP Fund Front Street Canadian Energy Resource Fund Ser F Pathway Multi SF Explorer Series A Rollover MIN Blackheath Futures Fund Class A Pathway Energy Series A Rollover MIN Enso Global Fund A Enso Global Fund Class U Enso Global Fund F Brompton Energy Opportunities Fund Series Brompton Energy Opportunities Fund Series Brompton Energy Opportunities Fund Series A Landry Morin Long Short Momentum Fund Series I Spartan Teraz Fund Curvature Market Neutral Fund A AlphaNorth Growth Fund Series A U.S. Equity Income Fund Class U U$ Fund Name Highest Return (3 Year) Ann. Return Ann. Std. # of Negative s AlphaNorth Partners Fund Class A King & Victoria Fund LP King & Victoria RSP Fund Class A Units Vision Opportunity Fund L.P. II Milford Capital Growth Fund Vision Opportunity Fund L.P Friedberg Global Macro Hedge Fund U$ SMI Opportunities LP Vision Opportunity Fund Trust ChapelGate Credit Opportunity Fund Ltd Agilith North American Diversified Fund Lycos Value Fund Class O Exemplar Leaders Fund Series F Northern Rivers Conservative Growth Fund LP Venator Income Fund Class A Calrossie Partners Fund JM Catalyst Fund Niagara Legacy Class B Fund DKAM Capital Ideas Fund Broadview Dark Horse LP Brompton Energy Opportunities Fund Series

25 Fewest Negative s (1 Year) Fund Name # of Negative s Ann. Return Ann. Std. ChapelGate Credit Opportunity Fund Ltd Lycos Value Fund Class P SMI Opportunities LP King & Victoria Fund LP King & Victoria RSP Fund Class A Units Venator Income Fund Class A Calrossie Partners Fund JM Catalyst Fund Fairlane A Plus Bond Hedged Fund Sprott Absolute Return Income Fund Class A Sprott Absolute Return Income Fund Class T Sherpa Market Neutral Income Fund Class A Agilith North American Diversified Fund Inflection Strategic Opportunities Fund Series A Kensington Hedge Fund 1 Series A+E+F Burlington Partners1 LP Broadview Dark Horse LP Ross Smith Opportunities Fund frontieralt Global Dividend Fund Milford Capital Growth Fund Wealhouse Panorama Fund, L.P Fund Name Lowest Volatility (1 Year) Ann. Std. Ann. Return # of Negative s Lycos Value Fund Class P Sherpa Market Neutral Income Fund Class A Garrison Hill Fund Series A Garrison Hill Fund Series A (Class G) US$ Garrison Hill Fund Series F Marret High Yield Hedge LP Class B Garrison Hill Macro Opportunities LP BSP Absolute Return Fund Multi Strat.US$ KCS Great White North Fund Class O KCS Great White North Fund Class F KCS Great White North Fund Class B KCS Great White North Fund Class A Picton Mahoney Market Neutral Equity Fund Class A Sprott Absolute Return Income Fund Class T Sprott Absolute Return Income Fund Class A Aurion Income Opportunities Fund Class D Aurion Income Opportunities Fund Ross Smith Capital Investment Fund Fiera Tactical Bond Yield Fund Class A Tapestry Divers Income Private Port Corp Class T IA Multi-Strategy Fewest Negative s (3 Year) Fund Name # of Negative s Ann. Return Ann. Std. ChapelGate Credit Opportunity Fund Ltd SMI Defensive LP JM Catalyst Fund King & Victoria Fund LP King & Victoria RSP Fund Class A Units SMI Opportunities LP Vision Opportunity Fund L.P. II Milford Capital Growth Fund Vision Opportunity Fund L.P Venator Income Fund Class A Broadview Dark Horse LP Vision Opportunity Fund Trust Calrossie Partners Fund Ross Smith Capital Investment Fund BSP Absolute Return Fund Multi Strat.US$ DKAM Capital Ideas Fund Picton Mahoney Income Opportunities Fund Class A Aurion Income Opportunities Fund High Yield Fund F Sherpa Diversified Returns Fund Class A High Yield Fund A U$ Fund Name Lowest Volatility (3 Year) Ann. Std. Ann. Return # of Negative s KCS Great White North Fund Class F KCS Great White North Fund Class A Tapestry Divers Income Private Port Corp Class A Aurion Income Opportunities Fund Tapestry Divers Income Private Port Corp Class T Aurion Income Opportunities Fund Class D Picton Mahoney Market Neutral Equity Fund Class A SMI Defensive LP Picton Mahoney Global Market Netural Equ Cl A C$ ChapelGate Credit Opportunity Fund Ltd BSP Absolute Return Fund Multi Strat.US$ IA Multi-Strategy Ross Smith Capital Investment Fund SG US Market Neutral Fund Tapestry Balanced Income Private Port Corp Cl T Tapestry Balanced Income Private Port Corp Cl A Arrow Diversified Fund Class A SEI Futures Index Fund Class P Arrow Diversified Fund Class F C$ Spartan Multi Strategy Fund Class A SEI Futures Index Fund Class O Volume 13 Issue 2 - February

26 2013 CALENDAR OF EVENTS Brought to you by radiusfinancialeducation.com (division of CHW Inc.) Retirement Coaching Conference (RCC) Wednesday, April 3 ~ Toronto 2011 marked the year that the first Baby Boomers turned 65 and every single day more than 10,000 boomers will retire. This demographic will redefine retirement and clients will need coaching in many crucial decisions. This is a huge opportunity for the advisor who gets it right. RCC will focus on all aspects of retirement planning, enabling a successful experience for clients. Exchange Traded Forum Thursday, May 2 & Friday, May 3 ~ Toronto Wednesday, June 19 ~ Vancouver / October ~ Montreal ETRs, ETFs, Indexing In its fourth year, the Exchange Traded Forum conference will address the latest trends and developments in this rapidly changing and growing sector. The agenda features industry experts sharing their experiences and forecasts in a format designed for retail and institutional investment professionals. Niagara Institutional Dialogue Monday, June 10 to Wednesday, June 12 ~ Niagara-on-the-Lake Niagara Institutional Dialogue is an exchange of ideas, knowledge and practices for Canadian Institutional Investors. A selected group of senior representatives from Canadian pensions and family offices, will participate in three days of informative discussions, education and networking. This confidential closed-door event is reserved for select industry participants. World Alternative Investment Summit Canada Monday, June 17 ~ Calgary Monday, Sept. 9 to Wednesday, Sept. 11 ~ Niagara Falls WAISC is in its 12th year and is Canada s largest gathering of alternative and exempt market investment professionals and service providers. Featuring panel discussions with top-level international speakers, fund managers and leading service providers, WAISC brings together over 400 delegates to explore every side of alternative investments. RCC Retirement Coaching Conference FOR INVESTMENT ADVISORS retirementcoachingconference.com EXCHANGE TRADED FORUM2013 exchangetradedforum.com institutionaldialogue.com WAISC th World Alternative Investment Summit Canada waisc.com Radius Financial Education radiusfinancialeducation.com (division of CHW Inc.) Radius Financial Education (Radius), a division of CHW Inc., has been producing high level conferences within the financial services sector in Canada for over 11 years. As Canada s leading producer of conferences within the financial sector, Radius events focus completely on education and networking through an exchange of unbiased ideas and information, allowing our delegates to be leaders in their chosen fields. Our top-down approach to the agenda enables us to deliver timely, thought-provoking, cutting edge, and sometimes controversial insight in a stimulating manner. We understand the importance of learning from the best. Each conference offers a well balanced speaker composition consisting of insight from authors, educators, economists, regulatory bodies and industry leaders from around the globe. For more information, please contact: Radius Financial Education T [email protected]

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28 WAISC th Annual World Alternative Investment Summit Canada Monday, September 9 to Wednesday, September 11 Fallsview Casino Resort ~ Niagara Falls WAISCWEST Monday, June 17 Hotel Arts ~ Calgary 2013 Now in its 12 th year, the World Alternative Investment Summit Canada WAISC 2013, scheduled for September 9-11 in Niagara Falls, will bring together 400+ investment managers; institutional, retail and accredited investors; and various professional services firms. As the largest Canadian conference serving the alternative investment and exempt market sector, delegates will hear from renowned national and international speakers who will address key industry issues, learn about new strategies from existing fund managers and network with key decision-makers and major players. Moderator Pat Boland Pat Bolland, Moderator WAISC & WAISC West WAISC will once again be returning to Calgary. WAISC West 2013 will bring together exempt market issuers, hedge funds, investors and service providers to educate, connect and update all participants in this rapidly growing and ever changing segment of the Canadian capital markets. Hear innovative new strategies as WAISC 2013 builds upon it s past success. I Be Informed I Be Connected I Be Visible I A presentation of To register, visit waisc.com or call x2238

29 IN UNFAMILIAR WATERS, WHO CAN YOU TRUST TO NAVIGATE? Without the proper guidance, the landscape is challenging. To be successful, you need a business partner that understands the realities of the industry, including the regulatory complexities. As a leading, full-service national law firm, with the largest Investment Management Group, Borden Ladner Gervais LLP (BLG) is that partner. Our expertise includes developing and implementing a broad range of investment fund vehicles, including alternate investments, structured products and ETFs; we understand the associated Canadian registration, regulatory compliance and governance issues. Our practical solutions have produced success for our clients, and more than our share of accolades. BLG has more Investment Management lawyers recognized by peers for their expertise than any other Canadian law firm in the Mutual Funds Law and Private Funds Law categories of The Best Lawyers in Canada 2012 and the Investment Funds and Asset Management category of The 2012 Lexpert /American Lawyer Guide to the Leading 500 Lawyers in Canada. The Firm is also ranked in the Leading category for Investment Funds in Canada by the Practical Law Company. With over 750 legal professionals spanning six offices in Canada, BLG is ready to help you chart a successful course. To find out how Canada s top Investment Management team can assist you, contact John Hall at or [email protected], or visit blg.com Calgary Montréal Ottawa Toronto Vancouver Waterloo Region Lawyers Patent & Trade-mark Agents Borden Ladner Gervais LLP is an Ontario Limited Liability Partnership. blg.com The Best Lawyers in Canada by Woodward/White, Inc., Aiken, SC. Lexpert is a registered trademark of Thomson Reuters Canada Limited. Thomson Reuters Canada Limited and its Licensors. All rights reserved.

30 Stronger governance. Reduced risk. Specialized support for Hedge Funds Asset servicing expertise. For today s investor, there is no room for error, imprecision, or delay. To succeed in this demanding environment, you need an asset servicing partner who is committed to the business. CIBC Mellon provides the stability and resources you need. With the financial strength of two industry leaders, we deliver unparalleled tools and expertise. All designed to help you meet your operational needs efficiently. For further information, contact: Barbara Barrow at Charbel Cheaib at cibcmellon.com A BNY Mellon and CIBC Joint Venture Company. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY Mellon trade-marks.

31 Save $400* off the combined price of the Exempt Market Products (EMP) Preparation Seminar and IFSE's EMP Course & Exam (regular combined price is $950) If you have been selling OM products, effective September 28, 2010, National Instrument will affect the way you conduct business. Every Exempt Market Dealer is required to complete and pass the IFSE Exempt Market Products (EMP) course and register with one single EMD firm registered in the province(s) you conduct business, in order to sell, trade or promote Exempt Market Products. Radius Financial Education offers their new, up-to-date Exempt Market Products Preparation Course, an IFSE certified 2-day program designed to prepare participants for writing the separate IFSE Exempt Market Products EXAM. EMP Preparation seminars are offered in the following cities: Toronto Calgary Vancouver For further information on Seminar dates in your city, please contact: radiusfinancialeducation.com A PRESENTATION OF A division of CHW Inc. *Some limitations may apply, please call for details.

32 Canada s Premier Source of Hedge Fund Information Vision Capital Corporation Profile M O N T H LY RE V IEW OF HE DGE FU N DS & ALT E RNAT IVE INV E S T ING SEPTEMBER 2012 VOLUME 12 ISSUE 9 WAISC 2012 CANADA S ALTERNATIVE INVESTMENT COMMUNITY GATHERS FOR THE YEAR S BIGGEST SUMMIT Prospering in the Canadian Publicly-Traded Real Estate Landscape Q U A R T E RLY REV IEW OF HE DGE FU N DS & ALT E R N ATIVE INV E S T ING OCTOBER 2012 VOLUME 12 ISSUE 10 WAISC th World Alternative Investment Summit Canada Stay informed with all the latest hedge fund news and performance data with in-depth analyses. HEDGE FUND PERFORMANCE TABLES AROUND THE HEDGE ANNOUNCEMENTS AIMA CANADA EVENT PROVIDES INTRODUCTION TO THE CANADIAN CTA/MANAGED FUTURES INDUSTRY M O N T H LY RE V IEW OF HE D G E FU N D S & ALT E RNATIVE INV E S T ING NOVEMBER 2012 VOLUME 12 ISSUE 11 AlphaNorth Asset Management is Best of the Best in Canadian Alternatives Again Maximizing Returns for Investors Over the Long Term HEDGE FUNDS & THE GLOBAL ECONOMIC CRISIS TURNING HEDGE FUND SECURITY INSIDE-OUT EXAMINING LIQUIDITY AND PORTFOLIO CHOICE DISASTER RECOVERY PLANNING AFTER HURRICANE SANDY AIMA CANADA DEBATES FORCES DRIVING PORTFOLIO RETURNS HEDGE FUNDS CARE CANADA GALA SUPPORTS PREVENTION OF CHILD ABUSE Q U A RTE RLY RE V IEW OF HE DGE FU N DS & ALT E RNATIVE IN V E S T ING JANUARY 2013 VOLUME 13 ISSUE 1 CANADA: U.S. DERIVATIVES TRADING BY CANADIAN FUND MANAGERS CONTINUED DODD-FRANK FALL-OUT AIMA CANADA EXPLORES YIELD GENERATION THE ROAD TO GLOBAL REFORM: HOW THE INTERNATIONAL HEAD OF SECURITIES REGULATORS SEES THE FUTURE Also includes: Current and historical Canadian hedge fund data Distribution of assets in Canadian hedge funds Average asset size of funds Return information, average and detailed Correlation tables Comprehensive Canadian hedge fund listings Tables of new funds, the best funds and the worst funds CHW Index update sheet Stay Informed with a Canadian Hedge Watch Membership Canadian Hedge Watch is published 11 times per year by Canadian Hedge Watch Inc. We welcome articles, suggestions and comments from our readers. All submissions become the property of Canadian Hedge Watch Inc., which reserves the right to exercise editorial control in accordance with its policies and educational goals. canadianhedgewatch.com Contact Information Canadian Hedge Watch Inc. 20 Toronto Street, Suite 820, Toronto, Ontario M5C 2B8 tel: ext fax: toll free: Media, Advertising & Editorial: [email protected] Subscriptions: [email protected] Disclaimer The information contained in Canadian Hedge Watch has been compiled from sources believed to be reliable, however accuracy is not guaranteed. Canadian Hedge Watch provides information as a general source of news and events and should not be considered personal investment advice. Before taking any action all readers are advised and cautioned to consult a certified financial advisor. We have endeavoured to ensure that the material contained in Canadian Hedge Watch is accurate at time of publication. X

33 ANNOUNCEMENTS Industry Veteran Ezra Zask s All About Hedge Funds Second Edition Examines the Changing Nature of Hedge Funds NEW YORK, NY - February 21, 2013 Now available is the eagerly awaited second edition of All About Hedge Funds, written by hedge fund luminary and industry expert Ezra Zask. This comprehensive introduction to hedge funds tells investors and industry profession als everything they need to know about the subject in easy-to-understand English. All About Hedge Funds includes discussion of the opportunities and risks in popular strategies, including long-short equity, global macro and fixed income as well as leverage, derivatives, short selling and other tools of the trade. The book gives a detailed history of the industry and, more importantly, a thorough discussion of the changes in hedge funds and investment management brought on by the recent credit crisis and the institutionalization of the industry. Fully updated to take into account the fallout from the financial trauma of recent years, All About Hedge Funds also covers today's legal, regulatory and tax issues, increasingly complex areas post-crisis. The author also explains how to fit hedge funds into a balanced portfolio for both individual and institutional investors to enhance overall returns during one of the most demanding periods in international investment history. In light of hedge fund losses and the Madoff scandal, All About Hedge Funds provides a useful guide to risk management and due diligence techniques and best practices. Every investor stands to benefit from Zask s long experience and winning narrative, says Donald H. Putnam, Managing Partner, Grail Partners LLC. Spartan is pleased to announce the launch of the Noble Bay Energy Fund Toronto, Ontario February 8, 2013 Spartan Fund Management Inc. is pleased to announce the launch of the Noble Bay Energy Fund, a multi strategy energy fund managed by Mark Ellis, MSc & CIM. Noble Bay s investment objective is to generate consistent, attractive risk-adjusted returns, with reduced volatility and with low correlation to the North American equity markets. The Fund utilizes four substrategies relative value, macromomentum, yield-options and special situations - which are self-complimenting in order to provide investors with a more consistent return profile than is available through traditional investing in the energy sector. Mark Ellis, the Portfolio Manager for Noble Bay, has over 11 years of experience investing in the energy sector. Prior to founding Noble Bay, Mark was a founding partner of Rayne Capital, a Calgary based energy fund that returned over 60% in 5 years to its investors. More information about the Noble Bay Energy Fund, including monthly reports, can be found on Spartan s web site: CHARTERED ALTERNATIVE INVESTMENT PLANNER TM CHAIP TM Know your alternatives. CHARTERED ALTERNATIVE INVESTMENT PLANNER TM CHAIP TM CHAIP TM is a certification course for the hedge fund and alternative investment industry, arming Canadian financial professionals advisors, planners, compliance officers, managers and analysts - with the tools they need to make informed decisions in alternative investments. Developed in 2005, the prestigious CHAIP TM designation is earned through a programme that focuses exclusively on Canadian hedge fund and alternative investment strategies, tax and legal issues, with: Investment strategies, relevant case studies plus legal & tax content written by McMillan Analytics, Due Diligence and Fit of alternatives within an overall portfolio Peace of mind for investors through best practices, code of ethics, integrity, professionalism and fiduciary duty To register, call or go to The CHAIP TM programme and CHAIP TM designation is produced by Radius Financial Education a division of Canadian Volume 13 Hedge Issue Watch 2 - February Inc

34 ETF Conference line-up for 2013! Toronto Thursday, May 2 & Friday, May 3 Hyatt Regency Vancouver Wednesday, June 19 Fairmont Waterfront Montreal Coming in October Hotel Omni EXCHANGE TRADED FORUM2013 Pat Bolland Moderator ETF 2012 Toronto, Calgary, Vancouver & Montreal SPONSORED BY ETRs ETFs Indexing TORONTO ~ VANCOUVER ~ MONTREAL A PRESENTATION OF XX radiusfinancialeducation.com exchangetradedforum.com T x 2238

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