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From time to time, Hillsdale is in the news. Our partners often speak at conferences or other events, and our accomplishments are covered in the financial media.

AIMA releases the first of its hedge-fund strategy papers

Morningstar – Monday June 19, 2006

BY Rudy Luukko – The Canadian chapter of the Alternative Investment Management Association (AIMA) last week released the first of what will be an ongoing series of strategy papers designed for investors.

The inaugural topic, Equity Market-Neutral Strategy, proved very timely because its release coincided with a global stock-market plunge. The lead author of the paper is Chris Guthrie, president and CEO of Hillsdale Investment Management Inc. in Toronto.

If the first of the series is any indication, the strategy papers will be useful, product-neutral background sources for investors who are contemplating hedge-fund investments. The 11-page market-neutral paper discusses various market-neutral approaches, sources of returns and risks, and historical performance. It also includes illustrative examples and a glossary.

The strategy papers will be released as they are completed, and will be accessible free of charge via the Web site.

Meanwhile, market-neutral strategies again figured prominently as AIMA presented its 2006 research award to Stephen Foerster of the Ivey Business School at the University of Western Ontario.

Foerster’s paper, entitled What Drives Hedge Fund Returns, analysed equity-market-neutral funds. He concluded that the excess returns of funds that pursue these strategies are largely attributable to economic and style factors, rather than manager skill as measured by the alpha variable. (Alpha measures the difference between a fund’s actual returns and its expected performance, given its level of risk.)

Foerster also concluded that market-neutral strategies play an important counter-cyclical role, in part because they tend to do well during periods of market volatility.