The CFa victoria 2012 Financial Markets Forecast Dinner

Opinions expressed in the CFA Victoria Beacon do not necessarily represent those of the authors’ fi rms of employment or of CFA Victoria and do not constitute a solicitation for the purchase or sale of any fi nancial instruments. Information herein is obtained from various sources and is not guaranteed for accuracy or completeness. The authors’ fi rms and CFA Victoria therefore disclaim any liability arising from the use of information in this publication.

S P R I N G 2 0 1 2 Published by CFA Victoriawww.cfavictoria.com

THE CFA VICTORIA

CFA Victoria’s 4th Annual Forecast Dinner featured a slate of notable and engagingspeakers (clockwise from left) Bryan Th ompson, John Di Tomasso and Paul Kedrosky. A recap of the event begins on page 4. (Photos by Yan Lyesin.)

TABLE OF CONTENTS

President’s Letter . . . . . . . . . . . . . . . . . . . 2

CFA GLOBAL CHALLENGE: UVic Investment Research Team Excels in CFA Global Challenge . . . . . . . . . . . . 3

CFA VICTORIA EVENTS: CFA Victoria Fourth Annual Financial Markets Forecast Dinner. . . . . . . . . . . . . 4

CFA ADVOCACY IN CANADA:Role of the Canadian Advocacy Council in Our Investment Industry . . . 7

MEMBER REPORT . . . . . . . . . . . . . . . . . . . 8

Do you have a story idea or a topic that will interest and inform CFA Victoria members? Send an e-mail to let us know what you would like to see in the newsletter or if you want to write something yourself.

Potential topic areas include, but are not limited to:• Industrydevelopments• Investmentthemes• Profilesofnotablemembers

Ifyouhaveanideaforanarticle,please send it to: Gord Walker, CFAGordon.Walker@RBC.com

WELCOME TO THE SPRING 2012 issue of The Beacon. I hope you have all survived winter’s gray months and are as excited as I am at the prospect of enjoying the longer days, warmer temperatures and, especially important to me as a Saskatchewan boy, the sunshine!

CFA Victoria kicked off the 2012 calendar year with our Fourth Annual Financial Markets Forecast Dinner. As has been the case for all of our Forecast Dinners, this year’s event was sold out with the highest number of attend-ees yet. Without a doubt, the Forecast Dinner has become one of Victoria’s “must-attend” investment- and business-related events.

In hosting this year’s Dinner, CFA Victoria enjoyed the generous support and sponsor-ship of Pimco (Platinum Event Sponsor), Three Point Motors and Concordia University (Gold Event Sponsors), Laughing Stock Vineyards (Wine Sponsor), bcIMC (Education Sponsor) and Man (Ballot Sponsor). As the popularity of this event continues to grow, both local and international businesses and organizations are realizing the value of partnering with CFA

Victoria to make it a success. In addition to these event sponsors, CFA Victoria is, as al-ways, grateful for the ongoing support of our Cornerstone Supporters: TD Securities, AGF Funds, CIBC World Markets, BMO Securities and Macquarie Securities. Without this ongo-ing support, CFA Victoria would not be able to continue providing unique and exciting programs to the membership of CFA Victoria and the broader investment and business community. And, of course, this event could not have been such a success without the participation of Dunnery Best (moderator) and Bryan Thompson, Paul Kedrosky, and John Di Tomasso (forecasters).

CFA Victoria also continues to partner with other local businesses and organizations. In late January, CFA Victoria hosted a Member and Candidate social at Outlooks for Men, a leader in Victoria men’s fashions since 1989, where attendees enjoyed a variety of tasty treats, an opportunity to mix and mingle, and an informative presentation by store owner, Dale Olsen. The event gave candidates the opportunity to meet each other as well as for society members to reconnect in a relaxed, casual, and fun atmosphere.

CFA Victoria similarly continues to work with local post-secondary institutions to engage students and provide additional learning opportunities. Representatives from the Board were on hand to attend UVic’s Finance and Investment event for students. Also, CFA Victoria and member volunteers worked with UVic’s team to prepare for the local stage of the CFA Institute Global Investment Research Challenge where the team competed against seven other BC universities. I’m happy to re-port the UVic team came out on top, winning the local event and getting the opportunity to

attend the Regional competition in New York representing Western Canada. Andrew Hoge reports on the team’s notable achievement on the opposite page, but here I would like to rec-ognize and thank two CFA Victoria members who volunteered their time to work with the team, Kenton Freitag (Industry Mentor) and Andrew Hoge (CFA Victoria Board Member for University Outreach). Likewise, I thank Justin Alyward, Belinda Liao, Allan Gage, Scott Blair, Andrew Boylan, Bryan Thompson, Hardeep Bamara and AJ Grewal who volunteered to be “mock judges” for practice sessions, as well as Kevin Ryan who volunteered to be one of the graders of the investment reports.

Looking ahead, CFA Victoria is excited to be associated with bcIMC in presenting the Summer Golf Tournament. This year’s event is expected to be largest tournament to date and net proceeds of the tournament will be donated to the Burnside Gorge Community Centre. The Community Centre provides family resource programs and services that re-spond to the needs of families in the area such as family outreach, parent & child programs, childcare, a youth centre, and special events. CFA Victoria is proud to collaborate with bcIMC – the largest single employer of CFA charterholders in the greater Victoria area – to support such a worthy organization. Be sure to register early for this event – last year the tournament was sold out in less than a week!

As always, in closing I would like to thank the Executive and Board of CFA Victoria for volunteering their time to provide insightful programming, fun events, and support and outreach to the Society’s members, CFA can-didates and the local investment and business community.

Share your knowledge and insights with readers of the CFA Victoria Beacon

President’s LetterJeffrey Hunter, CFA

Photo by Yan Lyesin

2 THE BEACON Spring 2012

UVic Investment Research Team Excels in CFA Global Challenge

CFA GLOBAL CHALLENGE

Continued on page 6.

In the Challenge, teams of university students compete by analyzing a target company and demonstrating their equities research, valu-ation, report writing and presentation skills. The target company for the local level of this year’s competition was Canfor Corporation, a British Columbia forestry company.

Having won the first round of the CFA Invest-ment Research Challenge, the UVic team moved on to the Regional stage of the com-petition held in New York City in early April. Our ‘home’ team competed against other local winners from Canada, the United States and Latin America.

The University of Victoria team’s win in the local stage was the culmination of consider-able effort and preparation. After a submitting a written equities research report for grading, the team assembled in Vancouver in March to face off against seven other British Columbia teams in the presentations part of the compe-tition. The competition was stiff, including the returning champions, Simon Fraser University,

and the University of British Columbia. Aware of the strong finance and investment pedigree of their rivals, the UVic team relied heavily on CFA Institute equity investment/analysis mate-rial to enhance their performance.

Each team member had somewhat differ-ent sources of inspiration that led them to participate in the Challenge. Ken had heard about the Challenge through CFA Institute and thought it would be a great real-world application of what he was learning in the CFA program and his undergraduate studies. As Ken put it, “I was very interested in equity research, and thought that the CFA Research Challenge would be the best way to expose myself to it.” Kelvin’s motivation was to “meet people who have the same interests and career goals, to lever-age my skills and knowledge and to network with people from the industry”.

In contrast, Arin was unaware of the CFA Research Challenge until Ken recommended it to him. He had previously partnered with Ken to start an investment society at UVic, and after looking into the Challenge Arin decided it would be a practical complement to his finance learning, including CFA Level 1 which he had just passed. He admitted too, that “the inspiration to participate was simply related to a well-known devotion to ‘beefing up’ the CV while approaching graduation”. Arin’s interest in capital markets led him to prioritize the competition as a core project as he neared the end of his undergraduate career at the University of Victoria.

One of the most important skills the CFA Research Challenge emphasizes is the importance of team work within the con-text of equities research. Kelvin noted that before his experience in this competition, “I had never thought the team dynamic can be this powerful in influencing the result. Also, it is much harder to achieve than I thought.” Other important skills developed by the team were time management and project planning. These skills made all the difference since each member was also getting ready to write a CFA exam either during the competition or later in June – balancing CFA exam preparation with their normal academic work load while compet-ing in the Challenge and carving out personal time for themselves was no simple task!

Through the competition, the team learned how to participate in analyst calls, interpret analyst opinions, and liaise with academic and industry mentors. Arin commented that understanding the industry in which a subject company operates is critical in that it provides ‘a drawing board for beginning the analysis’. Likewise, the team learned the importance of not getting lost in the weeds – for example, by over-emphasizing the details of various

technical valuation models – when trying to develop a convincing equities research thesis.

As they prepared for the next stage of the

Challenge, I asked the students about their career aspirations. Arin said his interest lies in alternative asset management, specifically asset management focusing on private equity in the music industry, including related tech-nology, internet, and social media fields. Kelvin felt that the technical skills he had learned regarding equity analysis will be invaluable in achieving his goal of becoming a professional equity analyst. His first co-op job was with an investment bank in Shanghai, and he hopes this will provide career momentum propelling him towards his goal. Regarding his plans for after graduation, Ken said he wants

Andrew Hoge, CFAInvestment Analyst, bcIMC

CFA VICTORIA CONGRATULATES the University of Victoria team – Ken Chme-la, Jingxiao (Kelvin) Zhang and Arin Veerapen – on winning the local stage of the 2012 CFA Global Investment Research Challenge. The team’s professional financial industry mentor was Kenton Freitag of bcIMC and academic support was provided by Angela Downey and Sorin Rizeanu of UVic’s Peter B. GustavsonSchool of Business.

The 2012 UVic team for the CFA Global Investment Research Challenge: Ken Chmela, Arin Veerapen, Jingxiao (Kelvin) Zhang.

They were bright and energetic and had already done a lot

of background work on under-standing the company

3THE BEACONSpring 2012

CFA VICTORIA EVENTS

This was the market forecast of Leon Tuey, the renowned veteran technical analyst, who set a positive tone for the Fourth Annual CFA Victo-ria Financial Markets Forecast Dinner held this past January. Though Mr. Tuey was unable to speak as scheduled at the Dinner because of a sudden medical problem, his message of opti-mism was relayed to the audience by Dunnery Best, the evening’s master of ceremonies.

As well as a steady flow of entertaining and insightful comments, Mr. Best, a portfolio manager with CIBC Wood Gundy, provided his own forecast. He referred to the ‘pick-up truck index’. Noting that sales of light trucks in North America over the past year were up over 11%, and those of heavier trucks were up 32%, Dunnery pointed out that with a new job and new confidence typically comes purchase of a new truck. His interpretation was that the U.S. economy will show surprising staying power in the future.

Regarding investment markets, Dunnery pointed out that an ocean of money had been laying fallow for several years, and that the strong bond rally has long outlived its run. In the US, since January 2007, all net mutual fund and ETF sales – the entire 1 trillion dol-lars – were fixed income products. U.S. private equity and pension allocation to equities was at its lowest weight since 1957. His prediction was that some of this wealth would soon start trickling back into equities on both sides of the border.

The first of the Dinner’s forecasters to speak was Bryan Thompson, Vice President, Equity Investments at the British Columbia Invest-ment Management Corporation, and a graduate of the University of Victoria. When introducing Bryan, Dunnery delighted the audience, which included many of Bryan’s col-leagues from bcIMC, by revealing that Bryan had once run a small cedar shake business at

the north end of Vancouver Island. He mused that this experience might have given Bryan a powerful incentive to pursue a higher educa-tion if that enabled him to avoid another Port Hardy winter. Thus motivated, Bryan earned a combined Bachelor of Laws and Masters of Public Administration, and more recently com-pleted the general management program at Harvard Business School. As Vice President of Equity Investments at bcIMC, Bryan has overall responsibility for the $39 billion equities pro-gram, including all internally and externally managed funds.

Bryan began, humbly enough, by confessing he had never believed anyone from bcIMC would actually pay good money to hear him speak.

He went on to discuss the role of forecast-ing in the investment business, a part of the investment industry which sometimes seems over-saturated to him. How worthwhile are these forecasts?

To put his own forecast within the proper con-text, Bryan reviewed some notable forecasts from the past. First was the infamous 1979 edition of Business Week that declared ‘the Death of Equities’, describing how inflation would destroy the stock market. Despite this dire prediction, equities gained 13% the following year, 50% over the next 5 years, and 250% over the next 10 years.

Bryan’s next example was the 1999 book by James Glassman and Kevin Hassett, Dow 36,000, in which the authors claimed that investors were systematically mispricing the risk of stocks compared with that of bonds. If similar measurement tools were applied to the two asset classes, they wrote, the Dow should actually trade around 36,000. In January 2000, two months after the book’s release the Dow peaked at 12,750 and then began a long bear market with the index eventually bottoming out at 7,200 in October 2002.

Bryan’s third example was The European Dream, Jeremy Rifkin’s book published in 2000 that explained how Europe’s vision of the future was eclipsing the American Dream. Going by current headlines, Bryan thought it now unlikely that Europe had much chance of over-shadowing the United States anytime soon.

Moving on to the contemporary stock market, Bryan made three important points. First, looking at the history of the MSCI World Index from 1911 to 2011, the period from 1997 to 2011 stood out for having essentially no gain, a mere 46 basis point rise over the 15 years. Second, intraday volatility had become greater. Days with a market move of plus or minus 2% have become much more common since about 1995. Such volatility is very prob-lematic for buy-and-hold investors such as bcIMC. Third, the correlation of stock returns had risen.

For a number of years, the increased use of ETFs, high frequency trading, and derivatives has been on his mind. The application of these methods and instruments has lessened the ability of active managers to outperform their benchmarks. For example, only 25% of active managers outperformed their benchmarks in 2011. To Bryan, this looked like a long-term trend rather than a cyclical headwind.

This raised questions regarding the ability of active managers to beat their benchmarks and the kind of mandates bcIMC assigns, which are typically broadly diversified or market-oriented mandates.

Also of concern are issues related to hold-ing periods and corporate governance. His comments provided a helpful insight towards understanding what kind of market environ-

The CFA Victoria Fourth Annual Financial Markets Forecast DinnerAndrew Hoge, CFAInvestment Analyst, bcIMC

InvEsTors arE WITnEssIng one of the greatest bull markets on record. In terms of magnitude and duration, this bull will surprise all. This is the black swan of the century, as many investors do not believe the bull market thesis.

Application of these methods and instruments has lessened the ability of active managers

to outperform their benchmarks — only 25%

outperformed in 2011

4 THE BEACON Spring 2012

ment today’s investors have to deal with and how a major institutional investor is affected by these trends.

Turning to his forecast, Bryan noted that 2011 was driven by ‘the macro’. Looking forward, he saw the European debt crisis worsening because a Greek default was imminent. He had seen signs that inflation in both China and India was being dampened, and there were signs of liquidity coming back. Like Dun-nery, he thought it likely that the U.S. would surprise to the upside in 2012.

For his specific forecasts, Bryan predicted that the S&P 500 would be up by over 10% at the end of 2012, and he put the 10-Year Gov’t of Canada bond yield at 2.5%, crude oil at $110 per barrel, gold at $1,500 per ounce, and the Canadian dollar at par with the U.S. dollar.

The next speaker, filling in admirably for Leon Tuey at short notice, was John Di Tomasso, formerly an equity portfolio manager for the Royal Insurance Company of Canada, who described himself as a disciple of Benjamin Graham’s and Warren Buffet’s long-term value approach to investing. Based in Victoria since 1997, John manages the Equilibrium Fund, a discretionary long/short commodity fund with an absolute return objective. Introducing John, Dunnery told the audience of the out-standing annual returns John had produced as the Fund’s manager.

Elaborating on his value investing principles, John said his method is centred on “what is normal”, or what is the equilibrium earnings capacity. His equities strategy was always to seek potentially undervalued stocks, buy many of these stocks, and then wait for the market to return these undervalued stocks to full valuation.

When applying his strategy, whether to stocks

or commodities, John said he follows three rules: the markets will surprise (you cannot predict unexpected events); trust facts, not opinions (most experts are wrong all of the time); and be patient (take a position and wait – his average holding period as an equity portfolio manager was three years or more).

John showed various charts of commodity prices in the natural resources area. Having examined real prices, adjusted for inflation, going back to 1921, his question was what happens in the long term to commodities? Do they go up 3% a year in real terms?

The answer was that there was not a steady rise in real terms; commodity prices tend to be stable, with lots of fluctuation around a simple mean but without a defined trend. This idea of reversion to the mean – the guts of his

management style – has been described by Barton Biggs of Morgan Stanley as the most powerful force of the markets. The equilibrium price is the central value. After realizing this, John migrated from the equities market to the commodities market. In his experience, equities are complicated – an investor has to account for debt loads, management issues, takeover bids, strikes, pension plans, and so on – and estimating the intrinsic value with so many moving parts is VERY hard. For him, commodity markets are easier to judge.

Expanding upon his three rules to ‘live your investment life by’, and echoing Bryan’s earlier warning that one should be cautious about forecasts (and all this at a Forecast Dinner!), John reminded his audience that the market will surprise. People get it wrong, and events happen out of the blue, but you can prepare for the unexpected by recognizing that we all get it wrong sometimes and positioning yourself accordingly.

Secondly, trust facts, not opinions. He encour-aged everyone to read his favourite book, Future Babble by Dan Gardner, saying that “once you read how wrong most experts are all the time, you will never have to listen to any expert ever again. You will want to figure it out for yourself.”

Third, be patient. Once you’ve done your work, it will take a while for your ideas to reach fruition. You have to position yourself and wait. John named his fund the Equilibrium Fund because it is founded on the reversion to equilibrium. Most markets are always in disequilibrium, and for both stocks and com-modities the intrinsic value is a hypothetical number that the market trades around. When the gap is large enough – take a position. As an equity investor, he was always looking for undervalued situations. With commodities, though, he now enjoys being able to play both the long and short sides.

Mr. Di Tomasso left the podium without providing a forecast, but was called back by a vigilant Dunnery Best. His broad forecast was for lower gold, silver and oil prices, but he abstained from any other prediction, candidly admitting that he “knows nothing about cur-rency or interest rates.”

Introducing the final forecaster, Dunnery noted that Paul Kedrosky was a Canadian who migrated to California, via Renfrew Ontario. Publisher of a blog called Infectious greed, Paul was previously a high tech analyst with HSBC Capital in New York and is currently a senior fellow of the Kaufman Foundation in Kansas City. Also a contributing editor and columnist for Bloomberg and a humorist, Paul is ultimately, as Dunnery put it, a financial philosopher.

Paul’s presentation was refreshingly nonlinear in style. He began by recounting some of the tweets he had received from his 250,000 Twitter followers when he asked them “What should I talk about at this Forecast Dinner?”

His opening comments were not just for en-tertainment. This was, he said, “An incredible commentary on social media. The world’s got-ten weird – not just the tweets.” The Kaufman Foundation manages over $2 billion, he noted, and so is keenly attuned to just how weird the world has become.

Continued on next page.

Significant contributors to the success of this year’s Forecast Dinner — (from left) Dunnery Best, Jeffrey Hunter, President, CFA Victoria, Donna Jones, Vice President, CFA Victoria, Paul Kedrosky, John Di Tomasso, and Bryan Thompson.

5THE BEACONSpring 2012

Uvic Investment research Team Excels in CFa global Challenge (continued from page 3)

The CFa victoria Fourth annual Financial Markets Forecast Dinner (continued from page 5)

to gain work experience in equity research and portfolio management. “My long-term career goal is to be in a senior portfolio man-agement role at a major financial institution.”

The UVic team was ably assisted in their prep-arations by Angela Downey, Sorin Rizeanu and Kenton Freitag. When asked about the team, Kenton said “My initial impression upon meet-ing the group was that they were bright and energetic and had already done a lot of back-ground work on understanding the company.” He encouraged the team to exhaustively understand the target company and its indus-try, identify the key earnings drivers, and then form a plausible investment thesis. When the team forwarded their draft report to Kenton in January, it was clear that they understood the company very well and had identified the key

earnings drivers. However, Kenton recognized that the investment argument did not flow clearly enough and needed to be stated with more conviction. He urged them to bring out the investment story more succinctly, and was not disappointed with their response: within a few days they had revised the report, signifi-cantly amplifying their recommendation and the reasoning behind it.

The day before the Challenge presentation in Vancouver the team did a dry run of their presentation. Kenton “…was amazed at their presentation skills … I was not surprised when they e-mailed me after the competition to report they had won”. Kenton added that his experience with the UVic team had been very positive and he was lucky to have had the chance to mentor such talent. “Probably

the greatest benefit to me was being able to watch the team think freshly and creatively about a company without getting caught up in the jargon and metrics that sometimes channels our thinking in the investment industry. Arin, Ken and Kelvin should be proud of their accomplishment - it was fully deserved.”

In New York, the UVic team went up against 44 teams in the Americas Region division of the Challenge, the winner coming out of this group being the Illinois Institute of Technolo-gy team. Ultimately, the global champion was Thailand’s Thammasat University. Kudos to the UVic team and all competitors worldwide for their hard work and excellence in execution, qualities that befit those who aspire to be CFA charterholders!

The Foundation saw a 30% chance of global recession due to Europe’s problems, though Paul thought Europe had done a few things right. Austerity programs had led to quantita-tive easing, which was a huge pressure release valve for the system. Judging from the yield curve, he believed a significant amount of pressure had been let off.

Paul saw high energy prices as a possible precursor to recession, and although he didn’t expect any US surprises he was extremely nervous because US corporate profits were high while wages as a share of GDP were low, a situation he considered unsustainable. He questioned how consumer spending can con-tinuously set new records. No further advances seemed likely without wages coming up, and the fact that household savings had turned down again and were getting uncomfortably low was a concern to him.

Paul’s specific year-end forecasts were for the S&P 500 to reach 1,450, the S&P/TSX Equity Index to be flat, a 10-year bond yield of 2.1%, crude oil at $115 a barrel, gold at $1,840 per ounce, and the Canadian dollar at parity with the US dollar.

Asked to describe a trading opportunity for 2012, Paul explained what what he called a ‘deranged trade’ based on the astonishing earnings being reported by Apple. Apple’s incremental revenue since the iPhone launch

had been amazing: a $41 billion jump in quarterly revenue in 2011 Q4, an amount equal to Intel’s entire top line revenue. As Paul put it, “They added an Intel in one quarter”, an unprecedented revenue gain.

He described his trade as the ‘Death Star’ trade. It was to buy Apple and sell short a basket of Apple’s direct competitors. After all, he reasoned, all that incremental revenue was coming from somewhere because consumer

spending in the economy was not growing nearly as fast as Apple’s revenue.

Looking back, Paul said that an investor would have done better being short all of Apple’s competitors (Nokia, RIM, Sony, etc.) than from being long Apple itself. The short side of the trade would have resulted in a profit of nearly 50% versus a 25% gain in Apple. While 25% is nothing to sneeze at, the short side of the trade produced almost double the gain. His conclusion was that the market had not an-ticipated the devastation in the value of a host of companies whose revenues were being displaced by Apple sales.

As a case in point, Paul asked the audience to consider Sony. He predicted that the com-pany’s share price would be weak in the near future as Sony’s consumer electronics segment was hugely exposed to destruction at the hands of Apple. More subtly, though, Sony’s financial services segment – its biggest profit generator – will be compressed by a wither-ing of revenue from extended warranties and financing related to the Sony product lines that Apple was plundering.

Some investors might still like Sony because they failed to recognize it as a value trap. The stock might look like great value because it is “essentially trading for cash”, but Paul consid-ered this deceptive. As happened to Research in Motion, cash will be depleted as Apple makes inroads into Sony’s top line revenue, and espe-cially the free cash flow currently generated by financial services which is levered to Sony sales of consumer electronics. Paul anticipated that the small decline in Sony’s share price in 2011 will accelerate to a ‘RIM style’ plunge in 2012.

In all, this year’s Dinner was again a fun and enlightening occasion, enlivened by knowl-edgeable and engaging speakers and an appreciative audience. CFA Victoria thanks all those who helped make the Dinner possible through their generous sponsorship and all of our guests for supporting this event.

The small decline in Sony’s share price in 2011

will accelerate to a RIM-style plunge in 2012

6 THE BEACON Spring 2012

CFA ADVOCACY IN CANADA

In Canada, the CAC represents CFA charter-holders by engaging with securities regula-tors, standard setters, self-regulatory organiza-tions, industry groups, and legislators. This is done by writing comment letters, in-person discussions, surveys, public consultations, and participation in user groups. The decision on which issues to engage in is made by the CAC members by measuring the issue against the “litmus test” of importance to Canadian CFA charterholders and investors, the opportunity to promote high standards of ethical and pro-fessional conduct in the investment industry, and the resources and expertise available to the CAC to address the issue in a comprehen-sive manner.

The CAC has existed in Canada in one form or another since the mid-1990s. It began as an informal gathering of past Society presidents, then evolved into a more formal committee of representatives from each Canadian Society, and eventually began to accept all Canadian CFA charterholders who are passionate about advocacy. The CAC regularly recruits new members and tries to maintain a balance of skills, experience, and locations in order to

create a diverse committee able to address issues affecting every part of Canadian capital markets without bias or skew to one particular viewpoint.

When new members join the CAC, they are asked to commit to a minimum of three years on the committee. This is because it takes some time to accumulate the experience of various formats and forums of addressing advocacy issues in the most efficient manner.

In 2011, the CAC commented on issues as far ranging as the Maple Group acquisition, mu-tual fund disclosure, and minimum amount and accredited investor exemptions. In com-menting on these issues, the CAC always takes the approach of putting the interests of clients first and promoting integrity and professional-ism in the investment industry.

The committee meets in person three times a year, and holds regular monthly conference calls. The in-person meetings take all day and usually involve meeting regulators and stan-dard setters in person to discuss current issues on their plate and those coming up in the future. For example, at the CAC’s most recent

in-person meeting, which was held in Vancou-ver, we had an opportunity to participate in the Canadian Securities Administrators’ review of National Instrument 45-106, Prospectus and Registration Exemptions. The CAC spoke with the President of the Exempt Market Dealers association and with representatives of the dedicated task force at the British Columbia Securities Commission to hear various views on the topic. After a thorough discussion by the committee, the CAC produced a comment letter that outlined our concerns with the minimum amount and the accredited inves-tor prospectus exemptions and our recom-mendations for changes that can be made to increase investor protection, such as improved risk disclosure and strengthening the advisor obligation to act in the client’s best interest. This letter as well as all others produced by the CAC can be found on our website, www.cfaadvocacy.ca.

The CAC is funded by the Canadian CFA Societies and the CFA Institute and reports to the Oversight committee comprised of the CFA Institute President’s Council Representative for Canada — most recently Janine Guenther, CFA — the Presidents of the four largest CFA societies in Canada (Toronto, Montreal, Vancouver, and Calgary) and the President of one “floater” society (most recently Edmonton). The Oversight Committee also provides an important feedback mechanism between the Canadian CFA Societies and the CAC on advocacy issues.

Photo by Yan Lyesin

Role of the Canadian Advocacy Council in Our Investment IndustryAda Litvinov, CFA CAC Vice Chair

THE CANADIAN ADVOCACY COUNCIL (the CAC) is a group of volunteers that come from different CFA Societies and different parts of the capital markets with a goal of advocating the principles embodied in the CFA Code of Ethics and Standards that all CFA charterholders around the world agree to uphold. I have had the privilege of working within this group over the past four years.

7THE BEACONSpring 2012

CFA Victoria MissionCFA Victoria promotes the highest standards of integrity, professionalism

and ethical behaviour within the investment industry, and encourages

professional development through the CFA Program. We facilitate

the open exchange of information and opinions between members

of Victoria’s investment community.

Welcome New MembersSamuel Jang, CFAassistant Portfolio Manager, EquitiesBritish Columbia Investment Management Corporation

Trevor A.F. Jones, CA, CPA (Illinois)ControllerTerapeak

Glenn Powerssr. research analyst, Capital Markets research groupBritish Columbia Investment Management Corporation

Xuan (Sheri) Liu

Would you like to be included in Members on the Move? It’s important to keep your contact informa-tion up to date and let others know where they can reach you.

Please let us know if you’re changing jobs or making any other move.

Send your information to info@CFAVictoria.com with “Members on the Move” in the subject line.

Officers

PRESIDENT Jeffrey Hunter, CFA

VICE PRESIDENT Donna Jones, CFA

SECRETARY Johann Kuntze, CFA

TREASURER Patrick Ngo, CFA

Board of Directors & Committee Chairs

MEMBERSHIP Millie Chow, CA, CFA

EDUCATION, CANDIDATE SERVICES

Varinder Grewal, CFA

EDUCATION, UNIVERSITY OUTREACH

Andrew Hoge, CFA

TECHNOLOGY Yan Lyesin, CFA

PUBLIC AWARENESS Ryan Bradford

PROGRAM Lilly Palmieri, CFA

NEWSLETTER Gord Walker, CFA

2011 / 2012 CFA Victoria Leadership

A Call for VolunteersCFA Victoria depends on volunteers

to enable all of our activities and initiatives. You can help by applying your time and skills in any number

ofways.It’sagreatwaytomeetothersinthelocalfinancialcommunity

and show off your talent.

Interested?Ofcourseyouare!

Contact us at info@CFAVictoria.com tofindouthowyoucangetinvolved.

Member Report

2012 Texas Scramble Golf TournamentPresented by bcIMC in association with CFa victoria

Benefitting the Burnside gorge Community association

Friday July 6th, 2012Gorge Vale Golf Club

Golf (including power cart) and dinner - $150

RSVP to Saurabh.s@bcimc.com

Upcoming CFA Victoria Events