SPRING 2019 NEWSLETTER MAY 28, 2019

IN THIS EDITION: UPCOMING AND RECENT EVENTS FORECAST DINNER IN REVIEW PROGRAM PROMOTION MENTORSHIP PROGRAM NATIONAL | INSTITUTE DEVELOPMENTS | INITIATIVES INFO FOR CANDIDATES CAREER DEVELOPMENT

Members, candidates and partners of the CFA Society are welcomed to share their stories, information and announcements in the next edition of the Newsletter. Please contact [email protected]. 1 TABLE OF CONTENTS

UPCOMING EVENTS

OTTAWA ...... 3-4 SOCIETIES NEARBY ...... 4 GLOBAL ...... 4

RECENT EVENTS FORECAST DINNER IN REVIEW ...... 5-7

MEMBER’S RESOURCES PROGRAM PROMOTION ...... 8-9

NATIONAL | INSTITUTE DEVELOPMENTS | INITIATIVES...... 10

CAREER DEVELOPMENT WHAT MAKES A GREAT INVESTOR? ...... 11-12

CFA SOCIETY OTTAWA LEADERSHIP & VOLUNTEERS...... 13

CFA Society Ottawa

www.CFAOttawa.ca UPCOMING EVENTS

JUNE 1, 2019 OCTOBER 2, 2019 SCHWESER MOCK EXAM WANT CANADIAN INVESTORS NEED TO KNOW ABOUT THE STOCK AND BOND MARKET Now that you have prepared and practiced for the CFA® exam, you are ready to perform and put your skills and Brad Gibson and John Lin from AllianceBernstein (AB) knowledge to the test. The Live Schweser Mock Exam will address the macro environment – myth and reality is as close to the actual CFA exam in format, difficulty, – and how it impacts the markets. Brad Gibson will talk and length as we can make it. The Mock Exam helps about the fixed income markets and John Lin will talk develop your test-taking skills, identify your weak areas, about equities. They will highlight the challenges and and demonstrate your mastery of the CFA curriculum. opportunities to investing in the region. The presentation Afterward, view answer explanations, check your score will also address who is invested there now and include a compared to those of other candidates, and drill deeper strategy for new investors to begin allocating to these into each question with our Mock Exam Tutorial. markets, which are now too big and too important to ignore.

Time: 9:00 AM – 12:00 PM | 1:00PM-4:00PM Brad Gibson – Co-Head, Asia Pacific Fixed Income Mock Exam Location: Azrieli Theatre 101 Brad Gibson is a Senior Vice President and Co-Head of 1125 Colonel by Dr. | Ottawa, ON K1S5B6 | Canada Asia Pacific Fixed Income at AB, focusing on regional Asian fixed-income portfolios. He is a member of the Global JUNE 18, 2019 Fixed Income and Emerging Market Debt teams. Prior to FINANCIAL STABILITY AND CONSUMER joining AB in 2012, Gibson was the head of Rates Strategies CONFIDENCE IN AN EVOLVING at ING Investment Management Australia, where he was responsible for the management of a range of domestic, FINANCIAL WORLD international, diversified, nominal and inflation-linked bond portfolios. Prior to that, he spent three years at the Please join us on June 18th for a luncheon as part of Commonwealth Bank of Australia as head of Global Mar- our Putting Investors First month. Peter Routledge, kets Singapore and head of Financial Institutions Domestic the President and CEO of Canada Deposit Insurance Sales, New South Wales. He was previously a member of Corporation (CDIC) will be discussing how the banking both the interest-rate options and bond committees of the and financial system has changed (and is stronger) Australian Financial Markets Association, and has lectured since the global financial crisis. He will highlight the on fixed-income portfolio management for the Securities environment then versus now and discuss what would Institute of Australia (now FINSIA). happen if a failure were to occur. We will also look at deposit trends in Canada and globally and the effort John LinPortfolio – Manager, China Equities CDIC is making to ensure Canadians know their money is well protected. John Lin has been a Portfolio Manager of China Equities since 2013, responsible for managing the China A Shares Speaker: Peter Routledge, CIDC Value Portfolios and the China Opportunity Fund. He also serves as a Senior Research Analyst, responsible Mr. Routledge leads CDIC’s team of approximately 140 for covering financials, real estate and conglomerate professionals from a variety of disciplines whose work companies in Hong Kong and China. In 2008, Lin relocated supports the corporation’s vision to earn the trust of to Hong Kong, where his research coverage included Asian Canadians as a global leader in deposit insurance and financials, real estate and telecommunications services resolution. He has extensive experience in Canada’s companies. He joined the firm in New York in 2006 as a financial sector. Prior to joining CDIC, he was a Senior research associate, covering consumer services companies Advisor at the Department of Finance where he provided for US Small & Mid-Cap Value Equities. He holds a BS advice on a range of policy issues including financial (magna cum laude) in environmental engineering from stability, housing finance, and competition in Canadian Cornell University, and an MBA from the Wharton School financial services. Mr. Routledge holds an MBA from at the University of Pennsylvania, where he earned the INSEAD in France, and a bachelor’s degree in business distinction Graduation with Honors. and economics from Simon Fraser University. 3 UPCOMING EVENTS

SOCIETIES NEARBY FORECAST DINNER JUNE 6, 2019 |

BUSINESS INTELLIGENCE JUNE 11, 2019 |

MONEY AND MEANING: THE SUSTAINABLE ALPHA OF IMPACT INVESTING JUNE 12, 2019 | TORONTO

PfAD – NEW FUNDING RULES FOR PENSION PLANS JUNE 13, 2019 | TORONTO

GLOBAL CFA INSTITUTE AND HARVARD BUSINESS SCHOOL: CFA OTTAWA INVESTMENT MANAGEMENT WORKSHOP JUNE 23-27, 2019 | BOSTON, UNITED STATES GOLF TOURNAMENT CFA INSTITUTE SEMINAR FOR GLOBAL INVESTORS JULY 22-25, 2019 | CHICAGO, UNITED STATES JUNE 28, 2019 | PREDATOR COURSE - GREYHAWK GOLF CLUB http://greyhawk.clublink.ca

Please join us for a morning of WEBINARS fun, sun, and networking. PRACTITIONERS’ INSIGHTS: ASSESSING EMERGING TECHNOLOGY BUSINESSES JUNE 06, 2019 REGISTRATION COSTS (INCLUDES CART AND LUNCH) ETHICAL DECISION MAKING JUNE 12, 2019 PRICE PER GOLFER: $125 PRICE PER GOLFER (CLUBLINK MEMBER): $25 FOURSOME (NON-CLUBLINK MEMBERS): $500 More at: www.CFAInstitute.org > Insights & Learning

4 RECENT EVENTS

FEBRUARY 27, 2019 MAY 2, 2019 PRESENTATION BY GMO: 7 YEAR OUTLOOK RECENT TRENDS AND PERSPECTIVE SUSTAINABILITY AND ESG

Tariq Fancy, Managing Director, Chief Investment Officer of Sustainable Investing at BlackRock gave a very well received presentation to a sold-out audience on Sustainable, ESG investing. His presentation covered many challenges of ESG investing, from the reliability of data to implementing ESG ideas into portfolios.

Catherine LeGraw, Partner with GMO, presented their 7-year outlook for asset classes based on their proprietary forecasting framework. Catherine gave her detailed assessment of the relative value of a wide range of asset classes in today’s market and how they fit within an overall portfolio. She also identified potential opportunity areas for both short-term tactical trades as well as investments that could generate positive returns over the longer-term.

MARCH 7, 2019 ADVANCED DATA MANIPULATION WITH EXCEL/ FINANCIAL MODELING

The CFA society Ottawa was pleased to host Marquee, one of the leaders in excel training. The Advanced Data Manipulation with Excel & Financial Modeling courses were well attended and received great feedback. We will be hosting Marquee again in the future, be sure to keep checking in our events page for the next training session.

5 MEMBERS RESOURCES

FORECAST DINNER IN REVIEW As is tradition, the outcome of this year’s Forecaster of the Year contest was also announced at the Forecast On April 16, 2019, the CFA Society Ottawa once again Dinner. Contestants tried their hand at forecasting the hosted its Annual Forecast Dinner at the Shaw Centre. value or yield for 10 assets as at March 15, 2019. First As the foremost investment conference in the nation’s place was awarded to Jane Ruttkayova, second place capital, the Annual Forecast Dinner brought together went to Chi Lê, and third place went to Simon Mitchell. almost 500 investment professionals from the region, Once again congratulations to the winners and we who gathered with their peers, colleagues and friends thank all participants for casting their forecasts! to hear from two fantastic speakers. We would like to thank this year’s title sponsor MFS for The night was hosted by comedian Adam Growe, host once again supporting the Annual Forecast Dinner, as of Cash Cab and renowned comedian, who kept the well as all platinum, gold, silver and bronze sponsors crowd engaged with his presentation of the Forecaster who are outlined on the following page. The success of the Year contest and unique brand of comedy on of the Annual Forecast Dinner depends on the ongoing world events, financial and investment analysis. The support of the local investment community and we are event also featured a keynote speech by Bruce Linton, extremely grateful for your sponsorship. Founder, Chairman and CEO of Canopy Growth Corpo- ration. Mr. Linton highlighted the challenges of building Planning for the 2020 Forecast Dinner will begin in a business at a time when cannabis was not yet legalized the coming months, including making available or is still not in neighbouring countries; as well provided information on sponsorship opportunities. insights into how the pharmaceutical industry may come to evolve to meet a more sophisticated demand. We appreciate your continued support.

6 2019 TITLE SPONSOR

2019 PLATINUM SPONSORS

2019 GOLD SPONSORS

2019 SILVER SPONSORS

2019BRONZE SPONSORS MENTORSHIP PROGRAM

LEARNING TOGETHER: AN INTERVIEW WITH MENTORSHIP PROGRAM PARTICIPANTS

Participants: Mentee: Mr. Joe Ciampa Mentor: Ms. Donna Bernachi Moderator: Mr. Graham Edwards. Mentorship Chair

What was your key motivation for wanting to participate in the Mentorship Program?

Joe: “I was looking for guidance on how to transition my career from financial planning in retail banking to portfolio management for high net worth clients and organizations. I needed someone with the right experi- ence and knowledge to help me achieve this goal. In essence, I was trying to look ahead and map out a strategy of my career for the foreseeable future”.

What was the process to accomplishing these goals?

Joe: “The first step is being clear of what you are trying like to work on. It is also important not to pretend you to establish with your Mentor. Second, is to ensure are something you are not. For example, if you are that you have the right Mentor who can help you extremely uncomfortable with sales, then be honest reach those objectives. Finally, you must be open and about that. Do not pretend, thinking this is what the honest with your Mentor in order for them to get a Mentor wants to hear. This is your program, not the better perspective of how they can be of assistance Mentor’s. Therefore, being clear with your objectives and guide you along the way”. is vital. These objectives can change throughout the program as well, and the Mentee and Mentor must What were the greatest challenges in delivering be flexible and willing to adjust as needed”. on Joe’s goals? What would you recommend to other participants Donna: I have been fortunate to Mentor several in the Mentorship program? Mentees since the start of this program and one of the most important aspects is to match the Mentor Joe: For myself the level of engagement you have and their area of interest with the Mentee’s goals. The with your Mentor will determine the success with the financial industry has become very specialized and it is program. You eventually develop a comfort level that important that any Mentor be able to share experiences allows you to discuss your strengths and weaknesses and provide guidance in a way that is meaningful to and how you can leverage them in order to achieve someone with different experiences. I agree with Joe’s your objectives. I have actually taken the next step assessment that a Mentee must be prepared and willing and have begun Mentoring other CFA candidates for an open and honest conversation. I think one of the and members. So, would I recommend the program? most productive conversations you can have is on the I think if you are willing to put in the time and Mentee’s weaknesses and fears and then work together commitment you will be rewarded. to strengthen any areas the Mentee feels they would

8 DELIVERING MEMBER VALUE FOR A STRONG INVESTMENT COMMUNITY

TRUST | ETHICS | PROFESSIONALSM

STRATEGIC EVENTS • Forecast Dinner • Women in Investment Management • Industry Expert Knowledge Sharing • Member Celebrations

EDUCATION • Forum Conference • Continuing Professional Development • University Relations • Mock Exams • Financial Literacy

CAREER SUPPORT • Mentorship Program • Career Fair Wine & Cheese • Job Board • Networking Opportunities

COMMUNICATION • Newsletters • Social Media • Brand Awareness Campaigns • Society Updates • Member Discounts

cfasociety.org/ottawa NATIONAL | INSTITUTE DEVELOPMENTS | INITIATIVES

CANADIAN ADVOCACY COUNCIL (CAC) are witnessing such a scenario unfold in Europe with the proliferation of bank owned systematic What is it? The Canadian Advocacy Council (CAC) internalizers. The European systematic internalizer is an independent organization comprising of regime is overly complex and fragmented, especially volunteers from across Canada representing over when compared to the Canadian regime. We would 17,000 CFA Institute members who are the primary also not support any shift towards a U.S. style market participants in Canada’s capital markets. The wholesaling regime in Canada.” CAC strives to advance market integrity, transparency and investor protection, on behalf of CFA Societies Proposed National Instrument 25 -102 Designated Canada and Canadian CFA charterholders. Benchmarks and Benchmark Administrators

Recent Requests for Comment Purpose of Letter: “Currently, benchmarks, and persons or companies that administer them, contribute data Joint CSA/IIROC Consultation Paper 23 – 406 that is used to determine them, and use them, are not Internalization within the Canadian Equity Market subject to formal securities regulatory requirements or oversight in Canada. However, as the importance of Purpose of Letter: “The purpose of this consultation benchmarks continues to increase in Canadian capital paper is to seek feedback in response to concerns markets, and because misconduct involving benchmarks regarding the internalization of retail/small orders has led to significant negative impacts on capital markets within the Canadian equity market.” causing several international developments, we are of the view that it is appropriate to develop a securities CAC Response Highlight: regulatory regime for benchmarks and their administra- tors, contributors and certain of their users.” • “The CAC is generally supportive of the status quo, perhaps subject to a few reasonable limitations, to help CAC Response Highlight: disincentivize any future proliferation of the current internalization practices.” • “We are generally supportive of the provisions contained in the Proposed National Instrument, mainly given the • “The internalization of retail orders on a marketplace prior instances of benchmark manipulation cited in is primarily facilitated through the use of the broker the CSA Notice and Request for Comment. We found preferencing mechanism (price-broker-time priority). the statistics cited with respect to the notional value of Broker preferencing is a violation of time priority and financial instruments that are derived from the two without time priority there is a disincentive for others to domestically important benchmarks, CDOR and CORRA, display liquidity on a marketplace. Effectively, broker particularly impactful. We are also supportive of this preferencing enables queue jumping and queue jump- iteration of benchmark regulation because the stated ing facilitates the internalization of retail orders by intention of the CSA is in part to have the EU recognize allowing the broker to passively take the opposite side the Canadian regime as being equivalent under the EU of a retail trade and to earn the bid/ask spread.” BMR, which would allow EU market participants to continue to use any designated Canadian benchmarks.” • “The CAC also believes that the alternative to a broker preferencing regime is a much worse outcome • “We think it is important to ensure that contributions for all investors. An outright ban on retail internal- to a benchmark do not diminish its quality, especially ization via the broker preferencing mechanism would considering that a benchmark based on insufficient likely create an economic incentive for each broker to sample sizes or that no longer appropriately represents set up their own trading venue to better access, and to its underlying market may set the value in a vast array trade against, their own order flow. Currently, investors of financial instruments by a large multiple.” 10 CAREER DEVELOPMENT

WHAT MAKES A GREAT INVESTOR? BY JOACHIM KLEMENT, CFA

The following was originally published on Enterprising I developed at university. While I may be a bit rusty Investor; reprinted with permission from the CFA Institute. at solving integrals these days, I’ve improved as a problem solver because I applied what I learned in school to an ever-widening set of problems. Think back to your education. Remember your university or secondary school days. What did you One simple example is that I employ the approach learn then that you still use today? Does any of it help advocated by mathematician Carl Jacobi: “Invert, you in your professional life? And before you moan always invert.” Jacobi argued that many complex about how nothing you learned in school has any problems can be solved if you invert them and think application , let me assure you that this is about the solution you want to find and then work not true. All of us are shaped by our education and backwards to your current situation. When you do that, we all picked up things in school that we still use you often find the quickest and most effective solution today. So, try again and think about what you learned. to seemingly intractable problems. In mathematics and physics, this inversion technique is applied all the time, In my case, the big lesson I took from university was and I use it again and again at work when assessing how to solve problems. In a previous incarnation, market developments or investment opportunities. I was a physicist and mathematician. This meant To me, it’s just common sense. solving integrals of complex functions or calculating the polarization of sodium D1 and D2 lines in the But when I look around the investment world, I see solar spectrum. In other words, don’t ask. too many research analysts, fund managers, and investors who can — to stick with my example from After roughly two decades in finance, I could claim above — solve integrals at incredible speed, but can’t that nothing I learned at university helps me do my solve any problem they have not encountered before. job. After all, what does calculating the polarization of sodium D1 have to do with investing? But in truth, every day at work I use the problem-solving skills 11 CAREER DEVELOPMENT

Research analysts and fund managers typically have about any of these technical details. Instead, they been trained in finance and learned everything about focus on the big themes and trends that drive markets financial statement analysis and how to calculate valua- today and will continue to in the years to come. They tion ratios, etc. They know every little detail about the think about the fundamental drivers, not about the companies they cover, from the dividend coverage ratio recent data flow, and they have developed investment to the amount of earnings growth expected in each of techniques that can adapt to a broad range of problems the next five fiscal years. And while that knowledge to understand the underlying market dynamics. may be impressive, it does not make them great investors. Graham’s Intelligent Investor and Security Analysis, How can it be that during the tech bubble, for with David L. Dodd; Marks’s The Most Important example, analysts on both the sell and buy side Thing; or Klarman’s Margin of Safety are timeless. assumed technology companies would grow their Some of these titles may be decades old, but they are earnings by 20% or more per year into eternity? still as relevant today as they were when they were Making that assumption may give you a fair value first published. Why? Because they don’t focus on in your discounted cash flow (DCF) model that is in technicalities but on how to assess investments in the vicinity of a company’s current market valuation. a fundamental and informative way. But if earnings grow at 20% indefinitely, the company would soon own the world. Heck, analysts currently So, in the spirit of “Invert, always invert,” to become estimate long-term earnings growth for Amazon at a great investor or research analyst, become an invest- 36.8% per year. Assuming Amazon’s PE ratio stays ment philosopher. Hone your skills in understanding constant, this means that in 2050 the company’s market dynamics instead of memorizing data points market cap would exceed US GDP. Research analysts or performing the DuPont analysis of return on equity. who cover Amazon and fund managers who invest To be sure, you will need these expertise to become a in it tend to know many details about the company, great investor, but once you grasp the technique and how it makes money, and where and how it can grow how to calculate the elements, there is little added in the future. Yet all their technical expertise makes value in doing it over and over again or to an ever them miss the forest for the trees. more sophisticated level.

Invert, Always Invert. That may keep you busy, but it won’t make you better, and it won’t make you a great investor. Now think of the great investors in history. What Read online: https://blogs.cfainstitute.org/inves- differentiates them from the run-of-the-mill? How tor/2019/05/09/what-makes-a-great-investor/ do people like Warren Buffett and George Soros, Seth Klarman and Howard Marks, CFA, Benjamin Graham and Peter Lynch, stand out? While all of them have different investing styles and approaches, they all have one thing in common: They are investment philosophers.

Look at the typical fund manager interviewed on television or in the papers. They usually share their “wisdom” about why they love growth or income stocks or why they think the Bank of England (BOE) will hike rates or not. Put another way, they talk their book. Now listen to Buffett or Soros: They don’t talk

12 CFA SOCIETY OTTAWA LEADERSHIP & VOLUNTEERS

Sean Kulik, CPA, CA, CFA, CAIA...... President

Roxana Lund, CFA ...... Vice-President

Siddarth Rajan, CFA ...... Treasurer

Ian Taylor, CFA ...... Secretary

Wesley Blight, CFA, CIM, FCSI ...... Past-President

Dela Hoyi, CFA...... Strategic Initiatives Chair

Dennis Trigylidas, CFA...... Co-Program Chair

Joe Ciampa, CFA...... Co-Program Chair

Kevin Pei...... Employer Engagement Chair

John Harvey, CFA, CIPM...... Education Chair

Graham Edwards, CFA...... Membership & Public Awareness Chair

Michael Maltsev...... Communications Chair

Yuriy Zabolotnyuk, PhD, CFA, FRM...... University Outreach - Carleton

Tarek Kassem...... University Outreach - UOttawa

Ian Harten ...... Treasury Support

Sikender Kahn ...... Financial Literacy Support

Trevor Mulligan...... Programming/Administration

Jad Ahmad...... Volunteer at Large

Marissa Edwards...... Social Media Support

Qi Zhang...... Social Media Support

CFA Society Ottawa c/o Trevor Mulligan 174 Bank Street P.O. Box 71047 Ottawa, Ontario K2P 1W0 Email: [email protected]