KENSINGTON CAPITAL PARTNERS Q&A KENSINGTON HEDGE FUND 1

Transcription

1 MONTHLY REVIEW OF HEDGE FUNDS & ALTERNATIVE INVESTING NOVEMBER 2013 VOLUME 13 ISSUE 11 KENSINGTON CAPITAL PARTNERS Q&A KENSINGTON HEDGE FUND 1 SURVEY RESULTS: EXAMINING CLOUD USAGE WITHIN THE INVESTMENT MANAGEMENT INDUSTRY THE BENEFITS OF SHADOW ACCOUNTING IN CURRENT AND FUTURE REGULATORY LANDSCAPES HEDGE FUND OCTOBER PERFORMANCE

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 funds raised US$100 billion through asset flows in 2013 Hedge funds delivered healthy gains in October as global markets trended upwards during the month. October 2013 Update: Hedge funds raised US$100 billion through asset flows in 2013 as at end-october Total assets in the hedge fund industry stand at US$1.91 trillion and are set to cross the highest level on record by the end of 2013 Assets in Greater China focused funds reached US$12.9 billion, the highest level on record Asia ex-japan hedge funds have outperformed the underlying markets by more than 5% October year-to-date Japanese hedge funds remained ahead of other regions, up 22.68% as at end-october A special congratulations to Hedge Funds Care Canada for raising $200, at the Open Your Hears to the Children Gala for the prevention and treatment of child abuse. This special fundraising event, held October 23rd in Toronto, was attended by more than 200 Canadian hedge fund industry professionals and their guests. It was the tenth annual such event organized by Hedge Funds Care Canada. Hedge Funds Care continues to make strides in raising both money and awareness to this very important cause, said Hedge Funds Care Canada President and Director Corey Goldman. "The dollars raised this year will have a significant impact in continuing to fight the scourge of child abuse in this country." All of the funds raised through the Hedge Funds Care Gala are distributed through grants to local, community-based organizations devoted to preventing child abuse. This is accomplished through education, prevention, intervention, research, advocacy and training programs. Again, congratulations to all concerned for your work and effort for such a worthy cause. Wishing you all the best during the holiday season and a Happy New Year! Terry Krowtowski Canadian Hedge Watch Inc. Volume 13 Issue 11 - November 2013

4 Exploring your alternatives? Let us help. We offer a complete range of services, customized to make life easier for alternative investment managers. To learn more, contact us at [email protected] CAPITAL RAISING MERGERS & ACQUISITIONS RISK MANAGEMENT RESEARCH INSTITUTIONAL SALES & TRADING BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A. and Bank of Montreal Ireland p.l.c., and the institutional broker dealer businesses of BMO Capital Markets Corp., BMO Nesbitt Burns Trading Corp. S.A., BMO Nesbitt Burns Securities Limited and BMO Capital Markets GKST Inc. in the U.S., BMO Nesbitt Burns Inc. in Canada, Europe and Asia, BMO Nesbitt Burns Ltée/Ltd. in Canada, BMO Capital Markets Limited in Europe, Asia and Australia, BMO Advisors Private Limited in India and Bank of Montreal (China) Co. Ltd. in China. Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. Registered trademark of Bank of Montreal in the United States and Canada.

5 Performance Summary Oct YTD MONTHLY REVIEW OF HEDGE FUNDS & ALTERNATIVE INVESTING NOVEMBER 2013 VOLUME 13 I SSUE 11 Editorial and Sales Editor Terry Krowtowski Sales Directors Helen Bilhete Judy Street Art Director Vic Finucci Online Developer Ferenc Schneman 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 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 4.49 Volume 13 Issue 11 - November

6 YOUR CANADIAN PRIME BROKERAGE SOLUTION National Bank Of Canada Financial Markets Prime Services is more than a traditional custodian and prime broker. Our comprehensive approach and integrated platform support both managed accounts and pooled funds. As a single point-of-contact, we leverage expertise across the Bank and deliver all the tools and resources necessary to optimize your investment performance. CLIENT INSPIRED. PERFORMANCE DRIVEN. PRIME SERVICES: PRIME BROKERAGE. ELECTRONIC TRADING SERVICES. SECURITIES FINANCE. DERIVATIVES. CAPITAL RAISING Rob Lemon [email protected] Eric-Olivier Savoie [email protected] nbf.ca National Bank of Canada Financial Markets is a trademark of National Bank of Canada used under licence.

7 C O N T E N T S N O V E M B E R Q&A with Kensington Capital Partners 4 With Eamonn McConnell Survey Results: Examining Cloud Usage 6 Within the Investment Management Industry The Benefits of Shadow Accounting in 8 Current and Future Regulatory Landscapes 2013 Calendar of Events 11 Hedge Fund Performance Tables 12 Around The Hedge Volume 13 Issue 11 - November

8 Q&A with Kensington Capital Partners CHW discusses Kensington Hedge Fund 1 with Eamonn McConnell from Kensington Capital Partners Canadian Hedge Watch Funds available today? What makes Kensington Hedge Fund 1 unique from other Hedge Eamonn McConnell The Fund is unique in the Canadian landscape as it focuses solely on the best emerging hedge fund managers in the country. Kensington believes strongly that smaller managers perform significantly better than large managers due to their focus and ability to be nimble. Kensington tracks the performance of over 150 Canadian hedge funds and performs extensive due diligence on the very best of them. Kensington then composes a portfolio based on the managers with the best overall performance according to their risk and reward metrics. The results to date bear out this enthusiasm, with the Fund generating nearly 1% returns per month throughout its 2 years of activity. There has been positive performance in 80% of the months of operation. This has been achieved with low volatility - being less than 1/3rd of the volatility of the public equity markets - and reward to risk ratios (Sharpe ratios) being very strong. This has all been achieved with very low correlation (30%) to the TSX index. CHW How do managed accounts minimize operational risk exposure and increase transparency in the Kensington Hedge Fund 1? EM Kensington Capital will invest in managers through the use of managed accounts where possible. We ask that the manager trades in the managed accounts so that it mirrors the performance of their underlying fund. Through managed accounts, the movement of cash by managers is limited and that provides Kensington with enhanced operational controls. If Kensington sees anything out of line or off strategy in the account, Kensington can freeze the positions, liquidate them, and appoint a different manager. The use of managed accounts also allows for increased transparency of the activity of the underlying fund through daily reporting and visibility. This provides detailed real time understanding of the inherent risk positions in the fund and also improves liquidity, while reducing gating risk. If we ever decide to take our money away from the manager, we don t have to wait in line behind its other investors, we just take the money out of our own managed account. CHW How does the Kensington Hedge Fund charge fees? Eamonn McConnell Managing Director EM At Kensington we charge investors 2 and 20. We then negotiate a fee sharing deal with each hedge fund manager that is in our portfolio. In that way investors pay one fee, and get the benefit of a diversified portfolio. 2/20 refers to the traditional fees charged by managers in the fund. The 2 would highlight the 2% annual management fee charged by the managers and the 20 refers to the carry or the 20% of the performance fee as an incentive for strong results. 4

9 CHW Explain the benefits of a diversified portfolio EM We have all heard of the old adage, don t put all your eggs in one basket. The benefits of a diversified portfolio are that investors are better protected by an increased number of managers. Kensington believes that investors benefit by diversifying the number, the location and the different strategies employed by the managers. We believe that by having about 10 to 12 separate managers in a portfolio, the investor is well protected, yet the potential for strong returns is not impacted. The Kensington Hedge Fund 1 will always try to have a mixture of the country s best Equity long/short managers, Credit long/short managers, Managed Futures (or CTAs) and Market Neutral managers are in the fund s portfolio. We are also always on the lookout for other interesting strategies which will increase returns as well as lower risk for the overall portfolio. This mixture of differing strategies provides not only for increased returns but better risk controls. CHW Why is Kensington Hedge Fund 1 focused on the younger and smaller funds rather than the long-established and larger funds available? EM Kensington strongly believes through our own analysis as well as detailed reports of academics that younger and smaller hedge fund managers consistently outperform larger and older funds. We see that this global phenomenon is true here in Canada as well. We believe that smaller managers have the ability to be more nimble in their approach to the marketplace. This advantage allows them to take advantage of situations that larger funds just cannot access. We do believe that some funds can become too large for proper trading of a manager s strategy and investors can suffer for it. There is also the strong argument that when a fund becomes large the manager is far more focused on the 2% management fee for annual compensation rather than looking at the 20% performance fee reward. There is a strong move by management not to blow the established revenue stream they have coming in. We at Kensington want to work with managers driven by the strong incentives of performance fees rather than those just clipping coupons from their management fees. We are always looking for the alignment of interests between the underlying managers and our investors. The alignment of incentive fees and the managers own money in their fund goes a long way to assure this. We feel that this is enormously important. CHW How often and why would you change managers? EM We remove or add managers based on our portfolio requirements and our view on the mix of strategies that will generate consistent returns. Our intention is to have 8 to 12 managers in the portfolio at any time to avoid over diversification. Eamonn McConnell is a Managing Director at Kensington and is responsible for the Kensington s hedge fund investments. For over 25 years, Eamonn has been involved in the investment banking and global fund management business. Eamonn has worked in Canada, the UK and Asia during his career. He has built his career with international institutions including Barclays Global Investors, Merrill Lynch and Deutsche Bank. In the late 1990s through 2002, he was a Managing Director responsible for the pricing, underwriting and risk management of Deutsche Bank s debt new issue business (Asia and Europe). Eamonn acted as the Deputy Chairman of the Alternative Investment Management Association (AIMA) Canada for 5 years from 2008 to His areas of activity have ranged from capital markets work in both debt and equity products, the establishment of a mutual fund investment management company and the subsequent launch of several funds, to the establishment of a private equity fund management company. Eamonn is currently a director of Gryphus Capital, a private equity firm he cofounded in 2002, based in Singapore. Eamonn has an MBA from McGill University and HEC France, and the CAIA designation. Kensington Capital Partners Limited is a Toronto based investment firm in the business of wealth creation, providing investors with high quality alternative investments for over 17 years. Our innovative investment platform includes diversified funds focused on private equity, hedge funds and infrastructure. Kensington also supports investors and private corporate clients with financial and strategic business advisory services. Volume 13 Issue 11 - November

10 Survey Results: Examining Cloud Usage Within the Investment Management Industry Today, the financial services industry has widely adopted cloud services. Bob Guilbert Managing Director Eze Castle Integration Just five short years ago, the idea of cloud services was still a new and untested one. For the most part, hedge funds and investment firms were still using traditional on-premise IT infrastructures or perhaps third-party colocation services. Hardware management and ownership was a critical component of any firm s day-to-day operations, and frequent refresh cycles caused firms to suffer through costly and labor-intensive infrastructure upgrades. Times have changed. Today, the financial services industry has widely adopted cloud services. One year ago, Eze Castle Integration found that nearly eight out of 10 investment firms were either using or planning to use cloud services in the near future. In 2013, those numbers continue to increase, and our recent survey results show that 87 percent of firms are using some form of cloud computing services. How the cloud is used today The benefits of cloud computing continue to change the industry, and as a result, 87 percent of this year s survey respondents are using cloud services to meet some kind of business need. The additional 13 percent indicated they had plans to use cloud services within the next three years. Of current cloud users, 64 percent said they are using the cloud to meet their basic business needs, including , file services, storage solutions and disaster recovery services. Firms with less than $1 billion in assets under management tend to rely on the cloud for these basic office functionalities more so (68 percent) than larger firms with more than $1 billion in AUM (50 percent). Almost half of firms using the cloud (49 percent) are leveraging it for application hosting needs. Hedge funds and investment firms can leverage cloud-based application hosting to quickly and easily add new users and applications. The cloud also allows for increased resiliency and requires less maintenance and upfront expenses. Cloud deployment models suited for financial services firms Survey respondents were asked to specify which type of cloud was best suited for the financial services industry. Nearly half (46 percent) said the private cloud was best suited for financial services, followed by 31 percent who selected a hybrid cloud and 24 percent who chose the public cloud. For the smallest size asset class (less than $100 million), hybrid and private clouds were the top choices, garnering 39 percent and 37 percent of the responses, respectively. All other asset classes overwhelmingly selected the private cloud as the ideal choice for the investment industry. When asked why firms selected one cloud model over the others, common themes emerged. Those who selected the private cloud as the ideal deployment model for investment firms most often gave security as the primary reason why. Proponents of the public cloud cited its ease of use and low cost as the primary benefits. Respondents who selected the hybrid cloud highlighted the combined value of security and accessibility. 6

11 What s driving firms to the cloud? Respondents were also asked what they perceived as the top business requirements or needs driving cloud deployments. Sixty percent of overall firms selected ease of access to applications and simplified application management as the primary drivers to cloud adoption. Another leading factor (55 percent) influencing cloud deployment is greater control and predictability of IT costs and budgeting. Not only does the cloud benefit firms in the short term by reducing upfront capital expenditures and transitioning costs to ongoing, operating expenses its advantages also translate to the long term. Reduced complexity and management of IT is another critical factor driving firms to the cloud, according to 55 percent of our survey respondents. By leveraging the experience and expertise of a third-party cloud services provider, firms no longer need to worry about technology maintenance or monitoring. Devastating disasters such as Hurricane Sandy on the East Coast of the U.S. have also prompted firms to reevaluate their business recovery strategies and technology systems. Fifty-four percent of our survey respondents indicated improved disaster recovery (DR) and business continuity planning (BCP) were important drivers to cloud utilization. Additional factors include: enabling global support of local and remote offices (46 percent), meeting industry or government compliance requirements (41 percent), and reallocating personnel resources to higher priorities and greater value areas (41 percent), and other (3 percent). Satisfaction levels of cloud users It s obvious that hedge funds and investment firms are adopting cloud services for a variety of reasons. Of firms using cloud services, almost all respondents are satisfied with their organizations chosen deployment method whether public, private or hybrid. When it comes to reducing IT costs, nearly all firms (93 percent) reported that their chosen cloud deployment methods either meet or exceed expectations. Ninety-two percent said their clouds are meeting or exceeding expectations by improving users IT experiences; only 6 percent answered below or significantly below expectations. Private cloud users found their model to be the most effective at meeting this need, with 98 percent satisfaction (meeting or exceeding expectations). In contrast, only 83 percent of public cloud users were as satisfied that their users IT experiences are improved by use of the cloud. Hybrid users fell in the middle at 91 percent. Despite concerns, firms seem to feel more comfortable about security in the cloud than in previous years. According to survey results, 93 percent of investment firms believe that private cloud deployment models are just as secure or more secure than traditional on-premise IT infrastructures. Only 13 percent said the private cloud was more secure than traditional IT. Results firms expect to see from the cloud Hedge funds and investment firms expect to see an influx of positive results due to their current or planned cloud usage. According to survey results, 60 percent of firms expect their current or future cloud usage to improve their data management abilities. Other outcomes firms expect to realize from the cloud include improved ability to manage applications (55 percent), improved resource utilization (54 percent), improved disaster recovery/business continuity (52 percent) and infrastructure simplification (52 percent). The adoption of cloud computing services is no longer a surprise, and the high satisfaction levels from respondents only reaffirm its success. Hedge funds and investment firms are continuing to leverage the cloud to meet their day-to-day operational goals and maximize business efficiencies. Adoption is growing at a rapid pace, and we predict cloud utilization will be the industry standard in the near future. Our 2013 survey clearly shows that investment firms of all sizes are looking to reduce complexities, simplify their technology management and control costs, all while maintaining success on the investment front. The private cloud remains the top choice for investment firms of all sizes, alleviating many of the concerns firms have traditionally had regarding cloud computing services. Firms expect to achieve success in the coming years as the cloud affords them better data management capabilities and improved resource utilization ultimately giving them the tools they need to focus on their primary investment decisions. Bob Guilbert is Managing Director for Eze Castle Integration. With more than 20 years of IT experience, Mr. Guilbert is responsible for leading Eze Castle Integration s marketing, partnership and product development functions. Prior to joining Eze Castle, Bob held senior marketing and business development positions at Virtual Iron Software, Double-Take Software (formerly NSI), EMC Corporation and Digital Equipment Corporation. Concerns about cloud adoption Despite the recent adoption of cloud services, some hedge funds and investment management firms remain cautious about moving to the cloud. Survey respondents noted security, regulatory requirements and support as their top concerns for their current or future cloud deployments. Security in the cloud has long been a principal concern for businesses, particularly so for investment firms managing sensitive financial data. Following the economic crisis in 2008, investment firms have reevaluated their security practices, and investors have demanded stronger controls to secure and monitor data and assets. Volume 13 Issue 11 - November

12 The Benefits of Shadow Accounting in Current and Future Regulatory Landscapes In recent years, the topic of shadow accounting has been an increasingly hot one among alternative investment firms and the third-party administrators that service them. There have been a number of catalysts that have fueled the debate as of late, including the announcement in early 2013 that Connecticut-based Bridgewater would be engaging Northern Trust to perform a full shadow of its primary administrator, Bank of NY Mellon. The industry will watch this move closely to gauge its level of success. Quite possibly, this could be the future bar against which others are evaluated from a due diligence standpoint. Also sparking the conversation are surveys from firms such as Ernst & Young that have indicated a growing interest from investors for funds to perform standard reviews of independent administrators work products. In upcoming years, the delegation of regulatory reporting requirements to fund administrators will likely spark yet another opportunity for firms that employ third parties to evaluate their oversight strategies and processes. Small to mid-sized funds that have resisted the drive toward fund administration thus far and are still running back offices based on Microsoft Excel are likely to be profoundly impacted by stringent reporting deadlines and the heavy data mining necessary to keep up with the requirements of the Alternative Investment Fund Management Directive (AIFMD), the Foreign Account Tax Compliance Act (FATCA), and new CFTC filings such as Form CPO PQR and CTA PR. These still-evolving requirements will encourage firms to seek either comprehensive in-house systems with robust databases and flexible reporting capabilities to replace Excel, or to outsource those middle and back-office processes. Both the industry as a whole and institutional investors looking to invest have pushed in recent years for firms to engage third-party administrators in these parts of the business. Those that have held out this long have typically done so out of a concern about jeopardizing the integrity and distribution of their data. To date, the cost efficiencies afforded by outsourcing are often diminished by requests for additional transparency and oversight on the part of the client. Nicole Eberhardt Co-founder Ingenious Initiatives 8

13 DAVE BUSTON For fund administrators, the reporting and data management burdens being rolled out over upcoming years provide an opening for increased services and resulting revenue, along with an even tighter bond with clients if the right level of transparency and efficiencies can be obtained. Keeping in mind that the consequences of noncompliance and failure to report range from costly to dire including steep withholding requirements for FATCA noncompliance, the ultimate loss of any and all marketing privileges to European investors for AIFMD, or a resulting complete ban from acting as a CPO under the CFTC/NFA funds will almost certainly be looking to keep a close eye on the deadlines and filings being made on their behalf. This is where an effective shadow accounting strategy that adds value, efficiencies and piece of mind can make all of the difference. Fund administrators that facilitate the shadow process through the use of technology and well documented data flows and workflows will be poised for what could be the best opportunity to upsell services since their inception. Administrators and hedge funds have access to sophisticated middle and back office platforms that allow the client to view the data and reporting for their specific business, and with added features such as the ability to review and sign off electronically, firms can achieve the ideal level of transparency. While upping the game with regards to the level of service provided, these types of systems and processes effectively eliminate the need for outdated and ftp-type report communications between the administrator and client that cause a potential security risk. Software providers of such systems have also invested heavily in the research and development directly related to regulatory reporting and data aggregation, making an integrated middle-to-back-office-to-client review environment a possibility for those fund administrators and funds that are willing to spend the time and money to make it a reality. As a result of the harsh regulatory reality, administrators clients will be seeking a level of transparency that will require administrators to pull back the veil on their operations more so than in past relationships. However, with nine in 10 investors believing that shadow accounting is highly beneficial to accurate valuation and reporting, according to Ernst and & Young s 2012 Global Hedge Fund and Investor survey, shadow accounting has been increasing in popularity even before the regulatory agencies came into play, making this landscape the perfect opportunity to adapt and excel. Nicole Eberhardt is the founder of Ingenious Initiatives. She has a decade of experience in the hedge fund industry. Before joining the Penny team, she served as Director of Professional Services for SS&C Technologies' hedge fund division. At SS&C, she was responsible for all product management, development, and consulting support for AdvisorWare, HedgeWare, and Total Return. Manage ALL your CE needs (and it s ALL free) INVESTMENT IE EXECUTIVE INSIDE NEWS LOOPHOLE New rules will be put in place to restrict the activities of EMDs. Pg. 8 TOP 25 Louis Vachon is the 2012 Quebec Financial Person of the Year. Pg. 10 DOOMSDAY? Our Western way of life faces collapse, says a new economic report. Pg. 12 MOVE Bruce Kagan now is back in front of clients with Gluskin Sheff. Pg. 20 RRSPS While most retirees are happy, those saving up face hurdles. Pg. 22 PENSIONS Securities and real estate markets drove growth in DB plans. Pg. 23 FOCUS ON PRODUCTS GROWTH PLAN Sentry Select s strategy is paying off despite a tough climate. 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We have an obligation, she says, to give to those who need us the most. (See story on page B12.) this year s rrsp season is MID-FEBRUARY PAGES More clients are warming to equities Fund companies report sizable boosts in sales volumes ies, meanwhile, are seeing sizable increases in sales volumes compared with the past few years. A number of clients who were running to the safe and secure last year are much more optimistic this year, says Bill Bell, president of Bell Financial Inc. of Aurora, Ont. Last year, they wanted to talk about the interest rate on a five-year guaranteed shaping up to be the best in several years as investors regain confidence and hold a more positive year, they want to know about the investment certificate [GIC]; this view of the future. U.S. equities market. 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For most of OBSI s life, the > TURN TO SOME / PAGE 4 CRE D IT U N I O NS Beyond Quebec BY RUDY M EZZETTA desjardins group s recent decision to buy a stake in Qtrade Financial Group will allow Desjardins, the Lévis, Que.- based financial services giant, to extend its reach into the credit union system outside its home province. At the same time, the deal will strengthen Vancouverbased Qtrade s existing position as a third-party wealth-management provider to the credit union system. > TURN TO NAME / PAGE 6 > TURN TO DEAL / PAGE 6 Active ETFs Delivering a World of Dividends For full details turn to pg B17 CONTINUING IE EDUCATION The CE solution you ve been waiting for is here Visit and click on CE Place to: - manage all your CE requirements - take and complete courses online - register for events - create personalized learning plans - print your certificates anytime For more information, contact us at or visit our website Volume 13 Issue 11 - November

14 unparalleled level of responsiveness At Walkers we work harder than any other law firm to ensure speed of response, delivered by an accessible team of industry focused experts. We offer solid, real world, commercial advice in all aspects of investment fund formation and strategy. BRITISH VIRGIN ISLANDS CAYMAN ISLANDS DUBAI HONG KONG IRELAND JERSEY LONDON SINGAPORE Global Legal Solutions 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. 18

15 Exchange Traded Forum (ETF) Wednesday, April 2 ~ Toronto Canadas leading event dedicated to Exchange Traded Products. Hear from leading financial industry professionals and industry experts who will provide valuable insights into the issues and trends that matter most to Canadas financial professionals. Join us for presentations, advisor/client-focused sessions, roundtable discussions, networking events and knowledge sharing critical issues facing the financial industry. Open to a target audience, attendance to this Forum is complimentary for qualified investment professionals. Niagara Institutional Dialogue (NID) Mon., June 9 to Wed., June 11 ~ 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. Exchange Traded Forum (ETF) Tuesday, June 17 ~ Vancouver Canadas leading event dedicated to Exchange Traded Products. Hear from leading financial industry professionals and industry experts who will provide valuable insights into the issues and trends that matter most to Canadas financial professionals. Join us for presentations, advisor/client-focused sessions, roundtable discussions, networking events and knowledge sharing critical issues facing the financial industry. Open to a target audience, attendance to this Forum is complimentary for qualified investment professionals. World Alternative Investment Summit Canada (WAISC) Mon., Sept. 29 to Wed., Oct. 1 ~ Niagara Falls WAISC is in its 12th year and is Canadas largest gathering of alternative and exempt market investment professionals and service providers. Featuring panel discussions with toplevel international speakers, fund managers and leading service providers, WAISC brings together over 300 delegates to explore every side of alternative investments. WAISC is a popular annual event that is not to be missed. World Alternative Investment Summit Canada (WAISC West) Wednesday, November 12 ~ Vancouver WAISC West is in its 3rd year and is Canadas largest gathering of alternative and exempt market investment professionals and service providers. Featuring panel discussions with toplevel international speakers, fund managers and leading service providers, WAISC brings together over 200 delegates to explore every side of alternative investments. exchangetradedforum.com institutionaldialogue.com exchangetradedforum.com waisc.com 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 12 years. As Canadas leading producer of conferences within the financial sector, Radius events focus on education and networking through an exchange of independent ideas and information, allowing our delegates to be leaders in their chosen fields. Our top-down approach to the agenda enables us to deliver relevant, 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.

16 H E D G E F U N D P E R F O R M A N C E (as of October 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. Worst 6 Mo. Max. Draw Down Std. (1 Year) Std. Beta Alpha (%) Correl. Correl. S&P500) % High Watermark % Pos. Since Inc. Acorn Diversified Program Agilith North American Diversified Fund AlphaNorth Partners Fund Class A AlphaNorth Partners Fund Class F Amethyst Arbitrage Fund Arrow Act II New Media Fund A Arrow Act II New Media Fund Class U Arrow Act II New Media Fund F Arrow Curvature Market Neutral Fund A Arrow Diversified Fund Class A Arrow Diversified Fund Class A U$ Arrow Diversified Fund Class F C$ Arrow Diversified Fund Class F U$ Arrow High Yield Fund A C$ Arrow High Yield Fund A U$ Arrow High Yield Fund F Arrow U.S. Equity Income Fund A C$ Arrow U.S. Equity Income Fund Class U U$ Arrow U.S. Equity Income Fund F 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 L.P. Class A Blackheath Volatility Arbitrage Fund L.P. 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$ 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

17 H E D G E F U N D P E R F O R M A N C E (as of October 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. Worst 6 Mo. Max. Draw Down Std. (1 Year) Std. Beta Alpha (%) Correl. Correl. S&P500) % High Watermark % Pos. Since Inc. Dynamic Contrarian Fund Dynamic Income Opportunities Fund Dynamic Power Hedge Fund Series C Exemplar Diversified Portfolio Series A Exemplar Diversified Portfolio Series F Exemplar Leaders Fund Series A Exemplar Leaders Fund Series F Fairlane A Plus Bond Hedged Fund Fiera Global Macro Fund Class A Fiera Global Macro Fund Class F Fiera Long Short Equity Fund Class A Fiera Market Neutral Equity Fund Class A Fiera Market Neutral Equity Fund Class F Fiera Tactical Bond Yield Fund Class A Formula Growth Alpha II Fund Class B Formula Growth Global Opportunities Fund Cl. S C$ 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 FrontFour Opportunity Fund GFM 130/30 Fund GFM Dividend Income Fund GFM Market Neutral Fund Goodwood Fund Class A Goodwood Fund Class B 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 JC Clark Adaly Fund Class A JC Clark Adaly Fund Class B 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 F 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 Kootenay Global Energy Abs. Return Fund LP Class A Landry Global Equity Long/Short Fund Series A Landry Global Equity Long/Short Fund Series F Landry Global Equity Long/Short Fund Series I Volume 13 Issue 11 - November

18 H E D G E F U N D P E R F O R M A N C E (as of October 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. Worst 6 Mo. Max. Draw Down Std. (1 Year) Std. Beta Alpha (%) Correl. Correl. S&P500) % High Watermark % Pos. Since Inc. Lightwater Conservative Long/Short - Class A Lightwater Nimble Fund Lycos Value Fund Class O Lycos Value Fund Class P Majestic Global Diversified Fund Majestic Global Diversified Fund Series A Majestic Global Diversified Fund Series I Man AHL Diversified (Canada) Fund Class A C$ 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 Man MGS Access Canada Note Cl II Man MGS Access Canada Notes Cl I 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 Pathway Multi SF Explorer Series A Rollover MIN Performance Diversified Fund Performance Growth Fund 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

19 H E D G E F U N D P E R F O R M A N C E (as of October 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. Worst 6 Mo. Max. Draw Down Std. (1 Year) Std. Beta Alpha (%) Correl. Correl. S&P500) % High Watermark % Pos. Since Inc. Picton Mahoney Market Neutral Equity Fund Class A Primevestfund Radin Global Opportunities Fund Fd Class Series 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 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 Humber Global Preservation Fund Spartan LSQ Spartan ontrend 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 Enhanced L/S Equity Fund Sprott Enhanced L/S Equity RSP Fund Sprott Hedge Fund L.P. Class A Sprott Hedge Fund L.P. II Class A Sprott Small Cap Hedge Fund 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 Global Balanced Private Port Corp Cl A Tapestry Global Growth Private Port Corp Cl A Tapestry Global Growth Private Port Corp Cl T Volume 13 Issue 11 - November

20 H E D G E F U N D P E R F O R M A N C E (as of October 31, 2013) Fund Name Asset Size ($MM) YTD 1 Year 3 Year (Ann.) Since Inception (Ann.) Best 6 Mo. Worst 6 Mo. Max. Draw Down Std. (1 Year) Std. Beta Alpha (%) Correl. Correl. S&P500) % High Watermark % Pos. Since Inc. Tapestry Growth Private Portfolio Corporate Cl A Tapestry Growth Private Portfolio Corporate Cl T The Vantage Fund Topaz Multi-Startegy Fund (Canada) Series H Trident Global Opportunities Fund C$ Trident Global Opportunities Fund U$ Trident Performance Corp II Venator Founders Fund Class A Venator Income Fund Class F Venator Investment Trust 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 Number of Funds in Sample M A R K E T I N D I C E S (as of October 31, 2013) INDEX NAME YTD 1 Year 3 Year Since Inception Best 6mo. Worst 6mo. Max. Draw Down Std. (1 Year) Std. Alpha Beta % 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 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] 16

21 AROUND THE HEDGE - A Review of Hedge Fund Happenings Toronto-based Morningstar Research, Inc., announced the winners of the 2013 Morningstar Awards in Toronto Wednesday November 27th. The awards are designed to help investors identify the country's most exceptional funds and fund managers for the previous year. Congratulations go out to: Best Multi-Strategy or Fund of Hedge Funds Phillips Hager & North Absolute Return, RBC Global Asset Management Inc. Best Opportunistic Hedge Fund DKAM Capital Ideas Fund LP, Donville Kent Asset Management Best Relative Value Hedge Fund RP Opportunities, RP Investment Advisors 5 Most Popular Stocks Among Hedge Funds Date: Thursday, November 28, 2013 Author: Meena Krishnamsetty, MarketWatch After the end of each quarter, hedge funds and other major investors disclose their long equity positions in stocks that are publicly traded in U.S. exchanges. Our research has shown that investors can significantly outperform the market by tracking the stocks traded by hedge funds. Historically, the 15 most popular small-cap stocks among hedge funds outperformed the market by an average of 18 percentage points per year (check out the details on our strategy here). Our model portfolio, which sticks to this approach, outperformed the S&P 500 by 29 percentage points in its first year, having returned 47.6%. Hedge funds are also skilled at picking large-cap stocks. The most popular large-cap stocks historically outperformed the market by a small margin. Apple Inc. was the most popular stock among hedge funds during 2011 and This year we have seen Apple AAPL +0.19% displaced from its throne (as the favorite amongst hedge funds in the first quarter) by Google Inc. GOOG +0.11% during the second quarter. Google's dominance didn't last long, and the leader was dislodged once again during the third quarter: the hedge funds' new pet is General Motors Company GM +0.08%. Let's take a look at the five most popular stocks among hedge funds at the end of the third quarter: 1. General Motors Any company on which Warren Buffett places big bets deserves our attention. Buffett's Berkshire Hathaway BRK.A -0.05%, BRK.B +0.04% has been buying this stock since it was trading in the low $20s. Currently Berkshire holds more than $1.4 billion in shares (this represents about 1.56% of its portfolio). Another "hedgie" bull that we should mention is David Einhorn's Greenlight Capital, which owns more than $600 million in shares. General Motors has also become the most popular stock amongst the hedge funds that we track. At the end of the third quarter, 140 funds held stakes in the company, compared to 122 at the end of the second quarter. 2. Google Google has been the third quarter s big loser. At least 20 hedge funds sold out their positions at the Internet giant. At the end of the third quarter, 139 funds were bullish about Google; this means a 12.5% decrease in relation to the previous quarter. Even its largest bull by the end of the second quarter, Stephen Mandel's Lone Pine Capital, cut its stake by 57% during the third quarter. However, several investment gurus are in fact still betting on this company's future performance. Currently, the most bullish amongst hedgies is Lansdowne Partners. 3. Apple During the third quarter Apple regained some of the ground lost during the second quarter. By the end of the third quarter, 132 funds disclosed long positions in the firm, compared with 123 by the end of the second quarter. Billionaire David Einhorn holds now roughly $1 billion in Apple s stock. 4. AIG American International Group AIG +0.53% lost some popularity during the quarter. Eight hedge funds abandoned their positions at the insurer, leaving 131 of them still betting on the firm s prospects. "Stock Manager of the Decade" Bruce Berkowitz holds, by far, the largest stake in the company (more than $4 billion in stock, which represents more than half its portfolio). 5. Citigroup Citigroup Inc C +0.08% is the third major loser. After six hedge funds sold out their positions, bulls now amount to 115. We would like to highlight, however, Ken Fisher's bet on this financial institution: over the third quarter, it roughly doubled its stake and now holds almost 11 million shares, worth more than $500 million. Volume 13 Issue 11 - November

22 Highest Return (3 ) Fund Name Year Ann. std (1 Year) Rosalind Capital Partners L.P AlphaNorth Partners Fund Class F Lightwater Conservative Long/Short - Class A Northern Rivers Global Energy Fund LP Spartan ontrend Fund Lightwater Nimble Fund Hillsdale Canadian Long/Short Equity Fund Class A Formula Growth Global Opportunities Fund Cl. S C$ DKAM Capital Ideas Fund Goodwood Fund Class A Goodwood Fund Class B Front Street Canadian Energy Resource Fund Ser F Front Street Canadian Energy Resource Fund Ser B Acorn Diversified Program FrontFour Opportunity Fund Primevestfund Picton Mahoney Global Long Short Resource Cl A Lycos Value Fund Class O GFM 130/30 Fund SMI Income LP AlphaNorth Partners Fund Class A Fund Name Highest Return (1 Year) Ann. Return Ann. Std. # of Negative s Rosalind Capital Partners L.P Agilith North American Diversified Fund King & Victoria RSP Fund Class A Units King & Victoria Fund LP Exemplar Leaders Fund Series F Lycos Value Fund Class O Formula Growth Global Opportunities Fund Cl. S C$ DKAM Capital Ideas Fund FrontFour Opportunity Fund Calrossie Partners Fund Venator Founders Fund Class A Venator Investment Trust Class A Formula Growth Hedge Fund Class F C$ Lightwater Conservative Long/Short - Class A Northern Rivers Conservative Growth Fund LP SMI Income LP JM Catalyst Fund Formula Growth Alpha II Fund Class B Radin Global Opportunities Fund Fd Class Series F Acorn Diversified Program Picton Mahoney Global Long Short Equity Fd Cl A C$ Lowest Return (3 ) Fund Name Year Ann. std (1 Year) SMI Opportunities LP Friedberg Global Macro Hedge Fund U$ Niagara Legacy Class B Fund Blackheath Futures Fund L.P. Class A SMI Defensive LP Pathway Multi SF Explorer Series A Rollover MIN Majestic Global Diversified Fund Majestic Global Diversified Fund Series A Palos Majestic Commodity Fund LP Majestic Global Diversified Fund Series I Niagara Discovery Fund Sprott Bull/Bear RSP Fund Class A Sprott Hedge Fund L.P. II Class A Sprott Hedge Fund L.P. Class A Man MGS Access Canada Note Cl II Man MGS Access Canada Notes Cl I CI Global Opportunities Fund U$ Trident Global Opportunities Fund U$ Auspice Diversified Trust Class S Auspice Diversified Trust Class A Auspice Managed Futures LP Fund Name Highest Return Ann. Return Ann. Std. # of Negative s Lycos Value Fund Class O King & Victoria Fund LP King & Victoria RSP Fund Class A Units Agilith North American Diversified Fund DKAM Capital Ideas Fund Milford Capital Growth Fund Northern Rivers Conservative Growth Fund LP JM Catalyst Fund ChapelGate Credit Opportunity Fund Ltd AlphaNorth Partners Fund Class F Exemplar Leaders Fund Series F Exemplar Leaders Fund Series A Calrossie Partners Fund Venator Investment Trust Class A Venator Founders Fund Class A Broadview Dark Horse LP Venator Income Fund Class F Rosalind Capital Partners L.P Vision Opportunity Fund L.P Vision Opportunity Fund L.P. II Northern Rivers Global Energy Fund LP

23 Fewest Negative s (1 Year) Fund Name # of Negative s Ann. Return Ann. Std. SMI Income LP Lycos Value Fund Class P Rosalind Capital Partners L.P King & Victoria RSP Fund Class A Units King & Victoria Fund LP JM Catalyst Fund Broadview Dark Horse LP Tapestry Global Growth Private Port Corp Cl A Tapestry Global Growth Private Port Corp Cl T ChapelGate Credit Opportunity Fund Ltd Venator Income Fund Class F WARATAH One Fund Ross Smith Capital Investment Fund Milford Capital Growth Fund BSP Absolute Return Fund Multi Strat.US$ Agilith North American Diversified Fund Exemplar Leaders Fund Series F DKAM Capital Ideas Fund Calrossie Partners Fund Venator Founders Fund Class A Venator Investment Trust Class A 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 Fairlane A Plus Bond Hedged Fund Picton Mahoney Market Neutral Equity Fund Class A BSP Absolute Return Fund Multi Strat.US$ SEI Futures Index Fund Class F SEI Futures Index Fund Class D SEI Futures Index Fund Class O SEI Futures Index Fund Class P SEI Futures Index Fund Class E Performance Diversified Fund Ross Smith Capital Investment Fund BSP Absolute Return Fund L/S Eq. US$ WARATAH One Fund Arrow Diversified Fund Class F U$ Arrow Diversified Fund Class A Arrow Diversified Fund Class F C$ Fiera Tactical Bond Yield Fund Class A Milford Capital Growth Fund KCS Great White North Fund Class F Arrow Diversified Fund Class A U$ Fewest Negative s Fund Name # of Negative s Ann. Return Ann. Std. JM Catalyst Fund ChapelGate Credit Opportunity Fund Ltd King & Victoria Fund LP King & Victoria RSP Fund Class A Units Broadview Dark Horse LP Venator Income Fund Class F Milford Capital Growth Fund Ross Smith Capital Investment Fund DKAM Capital Ideas Fund WARATAH One Fund BSP Absolute Return Fund Multi Strat.US$ Sherpa Diversified Returns Fund Class A Calrossie Partners Fund SMI Defensive LP Northern Rivers Conservative Growth Fund LP Exemplar Leaders Fund Series A Venator Founders Fund Class A WARATAH Performance Fund Palos Income Fund, L.P Sherpa Market Neutral Income Fund Class A Agilith North American Diversified Fund Fund Name Lowest Volatility Ann. Std. Ann. Return # of Negative s Picton Mahoney Market Neutral Equity Fund Class A KCS Great White North Fund Class F BSP Absolute Return Fund Multi Strat.US$ Ross Smith Capital Investment Fund WARATAH One Fund Aurion Income Opportunities Fund Aurion Income Opportunities Fund Class D Sherpa Market Neutral Income Fund Class A Tapestry Divers Income Private Port Corp Class A Picton Mahoney Global Market Netural Equ Cl A C$ Arrow Diversified Fund Class A Arrow Diversified Fund Class F C$ SEI Futures Index Fund Class D Arrow Diversified Fund Class F U$ SEI Futures Index Fund Class P SEI Futures Index Fund Class E Marret High Yield Hedge LP Class B SEI Futures Index Fund Class O SEI Futures Index Fund Class F ChapelGate Credit Opportunity Fund Ltd SG US Market Neutral Fund Volume 13 Issue 11 - November

24 Wednesday, January 29th and Thursday, January 30th, 2014 Omni Hotels & Resort Toronto, Ontario Acquire 12 solutions to maximize return on investments and deliver impact: 1. Economic update: Arm yourself against emerging economic realities 2. Impact investing: Deliver on your mission through more effective investments 3. Low yield solutions: Manage your assets for the long haul with fixed income 4. CIO outsourcing: Establish when it is profitable to outsource the CIO role 5. Risk management: Manage risk and prudently meet return objects 6. Alternatives: Achieve higher returns with more prudent hedging options 7. Donor agreements: Craft better donor agreements that flex as mandates evolve 8. Manager selection: Best practices in selecting and measuring money managers 9. Emerging markets: Capitalize on new markets and new investment instruments 10. Active vs. passive investing: Engage in a frank and interactive discussion 11. SRI and ESG: Build revenue and stakeholder support through social capital 12. Co-investing: Exploit new opportunities by pooling funds and lowering fees Hear from these thought-leaders: Exclusive VIP discount David Kaufman President and CEO Westcourt Capital Rahul Bhardwaj President and CEO Toronto Community Foundation Register Now and SAVE David Rosenberg Chief Economist Gluskin Sheff and Associates Kamal Rajani CFO Nature Conservancy of Canada Matthew Allen Derr President Sterling College (VT) Gerald Alain P. Chen-Young Vice President & Chief Investment Officer UNCF, Inc. Space is limited! Mention VIP Code: CHW15 *Applicable to Regular Investment only. Cannot be combined with any other discounts or promotions [email protected]

25 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.

26 ETF Watch C A N A D I A N Keep up to date with the latest ETF market trends and products with Canadian ETF Watch. ETF Watch C A N A ca na dia ne tfw D I A N VOL 4 ISSUE 5 SEPTEMB ER 2013 atc h.c om Low Volatility St rategy Stratégie de fa ible volatilité A bi-monthly on-line magazine designed to promote the ETF sector through industrysourced articles from ETF experts Comprehensive on-line source of the latest news, reports and conference updates EDITION SPECIAL CONFERE NCE EXCHANGE TRADED FORUM2013 exchang etradedf orum.co Dedicated exclusively to the presentation of investor information regarding ETFs m M O N T R E A L For investors, advisors & financial planners Canadian ET F Flows Building Portfo lios with the Efficient Fronti TSX: Home to er Canada s Ex change Trade Seasons Chan d Notes ge Shouldn t Your Invest Everything Yo ments Change u Know Abou Too? t Asset Alloc The Unbeara ation is Wron ble Lightness g of the Central Bank Put Where ETF professionals discuss the market in their own words. Canadian ETF Watch is produced by A division of CHW Inc. 20 Toronto Street, Suite 820, Toronto, Ontario M5C 2B8 tel: ext Media, Advertising & Editorial: [email protected] Subscriptions: [email protected]

27 Canada s Premier Source of Hedge Fund Information E R LY R LT E R S & A N AT I V ES E INV AUG UST MONT >> >> ES E INV TING SEP TEM BER VOL UME 13 IAL CO NF ER EN CE ED ITIO N s Fall ara orld Niag AnnuInalveWstment Also includes: th 12 ive da Ca na rn at it Su mm. 9 to Sept pt. 11 day, Se Mon sday,.c om ne Wed w.w ai sc ww Al te adi usf E >> QUESTIONS >> N AT I adi usf LT E R S & A H LY R ISSU E 13 C WAIS 2013 TY TO QUALI A FLIGHT NDS IN 2013 HEDGE FU GERS: ND MANA HEDGE FU AGAIN FOR YOUR K-UP EC E IT S TIM COMPLIANCE CH ANNUAL R INVESTO THE ORY AND REGULAT S TWO SIDES OF DEMAND PORTUNITY COIN OP 9 SAME ISSU E IN THE ICE ING VO USTRY S GROW CANADA DGE FUND IND HE GLOBAL MONT VOL UME SP EC E REPORT ORMANC TER PERF ND QUAR ND SECO HEDGE FU D E FUN 2013 TING >> ING YOUR ORE CHOOS TO ASK BRENFATIVE ASSET FUND ALTE EDG OF H EVIEW ES E INV N AT I V : d FATCA anies an ER & A LT QUESTION H W OF S FUND EDGE Comp Private ts May be FIs Trus >> ESSENTIAL S EVIE H LY R Stay informed with all the latest hedge fund news and performance data with in-depth analyses. 7 ISSU E TING T QUAR D E FUN 13 VOL UME JULY 2013 EDG OF H EVIEW QUAR T E R LY W REVIE EDG OF H D E FUN FUNDS BROKER HEDGE R PRIME TO ASK YAODUIAN PERSPECTIVE C N A C -A WAI2So0f13 ES E INV OCT OBE TING R 2013 VOL UME 13 ISSU E >> ww IONS ADA QUEST AIMA CAN EVERYONE WHETHER N HEDGE FUNDS OW SHOULD ai w.w sc.c 10 PPORTS DA GALA SU CARE CANA on Preventi use lls a Fa e gar Alternmatmivit NiaW or ld t Su th 12 ve st m enna da In Ca RKSHOP ADA WO AIMA CAN OFFSHORE LOOKS AT ING STRUCTUR N AT I V b Child A >> LT E R S & A om ED ITIO LS CE ER EN GARA FAL CO NF WAISC NIA RENCE SPECIAL NFE 2013 CO REVIEW 2013 N C WAIS ver cou orld Va12n AnnuInalveWstment th at ive na da rn it Ca. 12 Su mm Nov day,.c om Tuesw.w ai sc Al te adi usf E 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 A FOR ALPH REPORT MANCE ARCHES NADA SE R PERFOR CASE AIMA CA QUARTE T SHOW ND THIRD P INTRO PRODUC HEDGE FU CA R NCOUVE VA ISC WA 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.

28 YOUR CANADIAN PRIME BROKERAGE SOLUTION National Bank Of Canada Financial Markets Prime Services is more than a traditional custodian and prime broker. Our comprehensive approach and integrated platform support both managed accounts and pooled funds. As a single point-of-contact, we leverage expertise across the Bank and deliver all the tools and resources necessary to optimize your investment performance. CLIENT INSPIRED. PERFORMANCE DRIVEN. PRIME SERVICES: PRIME BROKERAGE. ELECTRONIC TRADING SERVICES. SECURITIES FINANCE. DERIVATIVES. CAPITAL RAISING Rob Lemon [email protected] Eric-Olivier Savoie [email protected] nbf.ca National Bank of Canada Financial Markets is a trademark of National Bank of Canada used under licence.