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Barry Allan, President & Chief Investment Officer WAISC Presentation September 13-14, 2010

Barry Allan, President & Chief Investment Officer WAISC Presentation September 13-14, 2010. Who We Are. One of Canada’s largest independent managers of fixed income credit Over $4.8 billion in AUM $850 million in long/short strategies 9 experienced investment professionals

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Barry Allan, President & Chief Investment Officer WAISC Presentation September 13-14, 2010

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  1. Barry Allan, President & Chief Investment Officer WAISC Presentation September 13-14, 2010

  2. Who We Are • One of Canada’s largest independent managers of fixed income credit • Over $4.8 billion in AUM • $850 million in long/short strategies • 9 experienced investment professionals • 100% employee owned

  3. Investment Landscape: 2010 • US economic growth and S&P 500 earnings will be above consensus in H1 2010; H2 will be weaker but more “muddle through” than slowdown • High Yield attractive 8 3/8% yield, 700 bps spread and a 1% default rate • The Fed remains on hold and the 10 yr. Treasury yield stays low • S&P 500 trades in a 1000 - 1200 range with periods of high volatility • Coal and iron ore prices stay strong based on Chinese demand and stable global growth • Oil prices range bound at $70-$85 • The world is nervous but have faith in central banks

  4. Investment Landscape: 2011- 2014What To Do: • Short equities, high yield credit, commodities • Long 30 year Canada bonds and the Canadian dollar • Long high grade corporate debt, e.g. Microsoft, P&G, J&J, Berkshire Hathaway - Short US Treasuries - Spreads go negative • Gold and silver: ETFs and stocks in C$ • Short CDX index swaps – counterparties important: JPM, DB, BNS

  5. Marret High Yield Hedge Fund • Exploit valuation inconsistencies between debt and equity securities within an individual high yield issuer’s capital structure. • Focus on the less-efficient Canadian high yield corporate bond market • Lower volatility strategy with yield cushion from the coupon. • Long an issuer’s debt and short its common equity: • Long the inexpensive part of the company’s capital structure and short the expensive part • Yield harvesting

  6. Marret Investment GradeHedge Fund • Invest long/short in Canadian & US investment grade corporate bonds • Selective long/short investment in Canadian & US high yield bonds, up to 10% • Full duration-weighted hedging using government bonds • Ability to hedge credit risk using actively traded credit indices • Fully currency hedge • Tactical use of leverage with maximum 3x net leverage

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