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“The Uneven Hedge”

Intelligent Investing. “The Uneven Hedge”. Presentation CIFPS Conference, June 20, 2005. Miklos Nagy, CFA, CFP. CEO and co-founder of Quadrexx a leading hedge fund expert in Canada

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“The Uneven Hedge”

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  1. Intelligent Investing “The Uneven Hedge” Presentation CIFPS Conference, June 20, 2005

  2. Miklos Nagy, CFA, CFP • CEO and co-founder of Quadrexx • a leading hedge fund expert in Canada • Founder and Chairman of Canadian Hedge Watch Inc. - Canadian leader in hedge fund information / education (www.canadianhedgewatch.com) • Co-author of Canada’s first hedge fund book “Hedge Funds for Canadians”. This book was the number 5 best selling investment book in Canada. Updated second edition is published in June, 2005 by Wiley. • Co-author of CHAIP course (Chartered Alternative Investment Planner) for IFIC (www.ific.ca) and CIFPs (www.cifps.ca)

  3. The Global Hedge Fund Market • Hedge Funds globally: between US$1 and US$1.5 trillion • Fund of hedge funds represent over 35% of hedge funds in terms of AUM • Growth in FOHF is fastest within the hedge fund industry (40% per year since 2000)

  4. The US Hedge Fund Market • Still account to roughly 50% of global hedge fund market • SEC vs FED view of hedge funds • Increased regulation on hedge funds in the coming years

  5. Why Hedge FundsHedge Funds versus Equities/Bonds – Long-Term

  6. Why Hedge Funds Hedge Funds versus Equities/Bonds – Snap Shots

  7. Low correlation to Major Markets: • During distressed market conditions, some Hedge Funds lose their diversifying properties; i.e. Concentration Risk

  8. Correlation switching This is an example of how individual managers change correlations during distress.

  9. The Canadian Hedge Fund Market • Hedge Funds in Canada: AUM estimated to be between $26 billion ($16 billion retail) • Fund of hedge funds represent between 35% and 40% of hedge funds in terms of AUM • Fastest growing hedge fund type used to be (until Portus) in the Canadian hedge fund industry: Guaranteed Notes backed by major banks

  10. The Canadian Hedge Fund Market • Fagmented market depending on: • Type of Product • Province of Residence • Investor Class: • Accredited Investor • Eligible Investor • Investor signing “Risk Acknowledgement Form” • Anybody else

  11. The Canadian Hedge Fund MarketThe Effect of PORTUS • Canada needs more level playing field for hedge funds • The growth in Principal Protected Notes will slow considerably • More regulation is likely

  12. The effect of Principal Protection(based on back-tested data bw. Jan, 1998 to Dec, 2004)

  13. Who is Quadrexx Asset Management Inc.: • Toronto based asset management firm: Managing unique and high quality alternative investment products. • The company was established in March, 2003 by the leaders of Canadian Hedge Funds to build a platform for a fund of hedge funds building on their relationship with Professor Luis Seco (Sigma)

  14. Quadrexx Market Neutral Performance Fund’s Back-Tested Return Statistics(as of February 28, 2005)

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