The Analyst December 2024 Issue

DEC 2024 TRUST & ETHICS

In this issue:

43003032

Driven by good intentions

Reflections on the Ethics Challenge

Not one, not two, but four Higgins charterholders!

Page 6

Page 10

Page 18

The Analyst | December 2024

From the editor | Sara Maginn Pacella

Scratching beyond the academic definitions of trust and ethics, my mind goes to the actions we take every day to improve our professional and personal communities. The famous concept of “think globally, act locally” frames the importance of how the actions we take impact others.

Table of Contents From the editor................................. 2 Board chair message ......................... 3

In this issue of The Analyst, on the theme of trust and ethics, we look at local and national initiatives, practices, and trends that will create lasting impacts.

From the desk of the CEO ................. 4 Trust & Ethics The investment industry should stop using this well-intentioned but misleading chart ......................... 6 Ethics Challenge Let's get ethical............................... 10

We celebrate a decade of the CFA Societies Canada Ethics Challenge, an event designed to increase student awareness of the ethical dilemmas and issues they may face as investment management professionals. CFA Societies Canada provides us with an in-depth look at the goals of this program and insights from past Challenge participants.

Book Review Trailblazers, Heroes and Crooks Stories to make you a Smarter Investor ............................. 12

For our special family charterholder profile, we meet the Higgins family, who have all been driven toward careers in finance. They each provide highlights from their educational and professional journeys and reflect on how they motivate and support one another.

Awards Hillsdale Investment Management — CFA Society Toronto Research Award.............................. 14

We also dig into the topic of risk management as it relates to one of the financial industry's favourite charts, commonly referred to as the ”missing the best days in the market” chart, and explore search fund investment vehicles as a unique, growing trend in career paths.

Events Learning to lead.............................. 16

This issue also honours the winners of the 2024 Hillsdale Investment Management – CFA Society Toronto Research Award. The winning research paper, Navigating Canada's Factor Zoo, employs spanning tests to evaluate seventeen factors from ten factor models from 1991 to 2022 in Canadian capital markets.

Charterholder profile The Higgins Family's shared journey to CFA success......... 18 Investing Search funds & acquisition entreprenuership............................ 22 Canadian advocacy council quarterly update ............................. 24

For those looking to sharpen their leadership acumen, we have essential tips on learning to lead effectively from CFA Society Toronto's Annual Leadership Forum.

I encourage you to check out our brand-new Book Review series. In this issue, we explore the new release, Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor, by Stephen Foerster, CFA. Visit us online for an exclusive recap from CFA Society Toronto's 67th Annual Investment Dinner, featuring engaging keynote speaker Henry (Hank) M. Paulson Jr., Founder and Chairman of the Paulson Institute and former US Secretary of the Treasury.

I wish you all a wonderful holiday season and a happy New Year.

Sara Maginn Pacella Owner, SMP Communication Follow us on social media

2

Editor, The Analyst

©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Board chair message | Brian Madden, CFA

Reflecting on the past year, I am immensely proud of the significant strides CFA Society Toronto has made in advancing our mission and serving our members and the investment industry.

Our community has grown to over 11,500 members, with 807 new professionals joining us—a testament to the trust and value that finance and investment professionals place in our Society.

We enhanced our events and programming, delivering over 50 high-impact events attended by nearly 3,500 professionals.

These events provided deep insights into critical industry topics and facilitated valuable peer connections. By offering timely and relevant content, we are empowering investment professionals to stay ahead in a rapidly evolving industry.

The Analyst is published quarterly by CFA Society Toronto 120 Adelaide Street West, Suite 2205 Toronto, Ontario M5H 1T1 Telephone: 416.366.5755 Website: www.cfatoronto.ca General questions: info@cfatoronto.ca Management Office Chief Executive Officer Fred Pinto, CFA Chief Operating Officer Norma Summers Director, Member Events & Experiences Jenny Yeo Director, Operations Valerie Weddell Director, Marketing & Communications Kenny Chan Senior Manager, Education & Events Meredith Lowry IT Manager Alexandra Pegg

Our Mentorship Program expanded by 15 percent, reaching nearly 60 mentor–protégé pairings. This growth underscores our commitment to nurturing future industry leaders and fostering a knowledge-sharing culture within our community.

Volunteer Relations Manager Leslie Venturino

Promoting diversity and inclusion has been a significant focus. Through events like our Annual Women in Finance Conference and our first-ever strategic partnership with VersaFi (formerly Women in Capital Markets), we have amplified our impact on critical issues within the industry. This collaboration marks a milestone in championing diversity, equity, and inclusion, reinforcing our leadership position in the finance and investment sector.

Leadership & Project Support Manager Casey Pope

These accomplishments result from the collective efforts of our dedicated members, passionate volunteers, and supportive sponsors. Your engagement and contributions have been instrumental in driving our success. Together, we celebrated numerous awards and recognitions that honour excellence among our members and future professionals, elevating the standards of our profession.

As we build on this momentum, I am confident that CFA Society Toronto will continue to thrive and make a positive impact in the investment and financial services industry.

Thank you for your unwavering commitment and for being an integral part of our journey.

On behalf of the board, I wish you all a wonderful holiday season and happy New Year.

Regards,

Corporate Relations Manager Aaron Ly

Marketing & Communications Manager Jessi-Lyna Wan Education & Events Breanne Cheeseman Associates & Ha Viet Ha, CFA

Candidate & Awards Administrator Nyssa Lawson Office & Membership Administrator Karin Koo

Volunteers Chair, Member Communications Walter de Wet, CFA Co vice-chairs, Member Communications Krystyne Manzer, CFA Joanna Wolff, CFA Past-chair, Member Communications Kamran Khan, CFA Senior Advisor, Member Communications Rossa O’Reilly, CFA Editorial committee members

Brian Madden, CFA, CFP CIO, First Avenue Investment Counsel Inc. Chair, Board of Directors CFA Society Toronto

Jack Bruton, CFA Joshua Giancola, CFA Winfred Lam, CFA Jenny Shen, CFA Mark Timm, CFA Sean Wang, CFA Hisham Yakub, CFA Jindou Zhang, CFA Kevin Zhao, CFA

Editor Sara Maginn Pacella

Opinions expressed in The Analyst do not necessarily represent those of the authors’ firms of employment or of CFA Society Toronto and do not constitute a solicitation for the purchase or sale of any financial instruments. Information herein is obtained from various sources and is not guaranteed for accuracy or completeness. The authors’ firms and CFA Society Toronto therefore disclaim any liability arising from the use of information in this publication. The information provided herein is intended only as general information that may or may not reflect the most current developments. The mention of particular companies or individuals does not represent an endorsement by CFA Society Toronto. Although professionals may prepare these materials or be quoted in them, this information should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought. ©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Art director Donna Metcalf

3

From the desk of the CEO | Fred Pinto, CFA, ICD.D As we look ahead into the new year, I am excited to share our vision for the future of CFA Society Toronto. Our recently approved three-year strategic plan sets a clear roadmap for advancing our new North Star by growing and enhancing our diverse and dynamic community.

Our strategic focus is on three key pillars: 1. Member Experience We are committed to delivering an outstanding, highly personalized member experience. This includes introducing new learning formats, expanding online engagement platforms, and tailoring resources to support your career growth.

Recognizing that each member’s journey is unique, we aim to provide the tools and opportunities to help you succeed.

2. Influence and Impact We aim to amplify our influence within the investment and financial services industry. By leveraging digital media and collaborating with strategic partners, we will offer exclusive learning opportunities and elevate the profile of our Society and its members. Our goal is to position CFA Society Toronto as a thought leader and advocate for the highest standards of ethics and professional excellence.

3. Operational Excellence Pursuing excellence in our operations is essential. We will revamp our volunteer programs to offer more flexible and meaningful engagement opportunities and refresh our website for an improved user experience. By enhancing our operational efficiency, we can better serve you and adapt to the evolving demands of our industry.

I encourage you to visit cfatoronto.ca for more details and regular updates about our strategic plan and the initiatives we have planned for the coming year. We are eager to share how these developments will benefit you directly.

Our commitment to you includes continuously seeking ways to add value to your membership through innovative programs and services. Fostering a robust and connected community remains a priority because we can achieve greater success together. In a rapidly evolving industry, we are dedicated to staying ahead of trends and ensuring our offerings meet your changing needs.

I invite you to join us on this exciting journey as we work together to shape the future of finance.

Your participation and feedback are vital as we implement our strategic initiatives.

Thank you for your continued support and commitment to CFA Society Toronto. Season's greetings and happy New Year.

Sincerely,

Fred Pinto, CFA, ICD.D CEO, CFA Society Toronto

Welcome new members and CFA charterholders

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Canada’sglobal globalsuite suiteof ofEquity Equity Canada’s EssentialsETFs ETFsisisnow nowhere here Essentials Canada Canada

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GlobalX X S&P 500 Index ETF Global S&P 500 Index ETF Distributions: Quarterly | Mgmt Fee: 0.08%2 Distributions: Quarterly | Mgmt Fee: 0.08%2

Global X MSCI EAFE Index Global X MSCI EAFE Index ETFETF Distributions: Quarterly | Mgmt Fee: 0.20%2 Distributions: Quarterly | Mgmt Fee: 0.20%2

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This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase investment products (the “Global communication intended for informational purposes andand does not constitute an offeras, to investment, sell or the solicitation ofaccounting an offer to purchase investment “Global XThis Funds”) managed byisGlobal X Investments Canada Inc. andonly is not, should not be construed tax, legal or advice, and should notproducts be relied(the upon in X Funds”) byshould Globalseek X Investments Inc. and isasnot, and shouldregarding not be construed as, investment, legal orshould accounting and should advisors not be relied that regard.managed Individuals the adviceCanada of professionals, appropriate, any particular investment.tax, Investors consultadvice, their professional priorupon to in that regard. Individuals should seek the advicestrategies. of professionals, as appropriate, any particular investment. of Investors should consult their professional advisors prior to implementing any changes to their investment These investments may regarding not be suitable to the circumstances an investor. implementing any changes their investment Thesesubsidiary investments may not beGlobal suitable to the circumstances of an Asset”), investor.the Korea-based asset management entity Global X Investments CanadatoInc. (“Global X”) is strategies. a wholly-owned of Mirae Asset Investments Co., Ltd. (“Mirae Investments (“Global is a wholly-owned subsidiary of Mirae Assetand Global Co., Ltd. (“Mirae Asset”), the Korea-based asset management entity ofGlobal MiraeXAsset FinancialCanada Group.Inc. Global X is a X”) corporation existing under the laws of Canada is theInvestments manager, investment manager and trustee of the Global X Funds. of Mirae Asset Financial Group.

Global X is a corporation existing under the laws of Canada and is the manager, investment manager and trustee of the Global X Funds. © 2024 Global X Investments Canada Inc. All Rights Reserved. © 2024 Global X Investments Canada Inc. All Rights Reserved. © 2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024 5 1

1 2 2

TRUST & ETHICS Figure 1

The investment industry should stop using this well-intentioned but misleading chart | by Kamran Khan, CFA

Source: Neufeld, Dorothy. “Timing the Market: Why It’s So Hard, in One Chart.” Visual Capitalist, August 14, 2023.

The investment industry and financial advisors use various marketing tools to educate clients about basic principles and guide their investing behaviour. Time value of money, power of compounding, risk versus reward, and the importance of diversification are just a sampling of topics often discussed.

To help deter clients from pre-maturely selling during periods of market volatility, the industry often turns to one of its favourite charts. It’s commonly called the “missing the best days in the market” chart.

For as long as I can remember, I’ve seen iterations of this chart produced by just about every large investment firm. To avoid calling out any specific financial firm, I’ve included an example of this kind of chart produced by Visual Capitalist.

6

One of the investment industry’s favourite charts The chart typically displays the long-term performance of a broad market index, such as the S&P 500 or the S&P/TSX Composite, while also showing the hypothetical performance if an investor missed the best 10 days, 20 days, 30 days, etc., of those markets.

The intended purpose of this chart is often to highlight the importance of staying invested and avoiding the temptation to sell investments during periods of market volatility. It illustrates the potential consequences of not being invested and missing out on the best days in the market.

Using the Visual Capitalist chart example, $10,000 invested in the S&P 500 using a buy-and-hold approach from 2003 to 2022

©

would grow to $64,844, providing the investor with a very attractive total return.

However, if an investor sold the investment (usually during periods of fear and panic) and somehow managed to miss the best ten days, their total return would only amount to $29,708. The consequences of that poor market timing would be a greater than 50 percent reduction in the total value of their investment over the 20 years. The charts also exhibit the even worse returns an investor might experience by missing more of the best days in the market.

The implication of these charts is clear.

They argue in favour of buying stocks and holding them and aim to deter investors from panic selling or trying to time the market. As the adage goes, “time in the market” is more important than “timing the market.”

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Driven by good intentions, but incredibly misleading While I agree with the general conclusion of these charts, I be-

without analyzing what would happen if the investor also missed

lieve the argument is based on false premises and misses several

some of the worst days.

important points. Large daily gains often occur close to large daily

To illustrate this point, let’s examine S&P/TSX Index daily return

losses during periods of elevated market volatility. Therefore, you

data from July 1979 to May 2024. The table at right displays the

can’t compare the results of missing the best days in the market

50 best and 50 worst trading days over that time period.

Figure 2

50 Best Days

50 Worst Days

Return

Date

Return

Date

Return

Date

Return

Date

12.0%

2020-03-24

4.0%

2002-10-15

-12.3%

2020-03-12

-5.1%

2020-03-27

9.8%

2008-10-14

4.0%

2011-11-30

-11.1%

1987-10-19

-4.7%

2008-01-21

9.7%

2020-03-13

4.0%

2001-04-18

-10.3%

2020-03-09

-4.6%

2020-03-11

9.0%

1987-10-21

3.9%

2009-05-04

-9.9%

2020-03-16

-4.5%

2008-10-09

7.2%

2008-10-20

3.9%

2008-12-29

-9.3%

2008-12-01

-4.4%

2008-10-21

7.2%

2008-10-28

3.9%

2000-01-07

-9.0%

2008-11-20

-4.4%

1981-09-25

7.0%

2008-09-19

3.8%

2020-03-19

-8.1%

2008-10-27

-4.4%

2009-06-22

5.9%

2008-11-28

3.8%

1982-01-28

-8.1%

2000-10-25

-4.3%

1987-10-22

5.6%

2008-11-21

3.8%

2008-10-29

-7.6%

2020-03-18

-4.2%

1980-03-17

5.5%

2008-12-08

3.8%

2001-01-03

-7.6%

1987-10-26

-4.1%

2020-06-11

5.3%

2009-03-23

3.8%

2011-08-09

-6.9%

2008-10-02

-4.1%

1998-08-31

5.1%

1987-10-30

3.7%

2000-12-05

-6.9%

2008-09-29

-4.0%

2011-08-08

5.1%

1980-03-28

3.7%

2008-10-30

-6.9%

1987-10-20

-4.0%

2008-09-15

5.1%

2020-04-06

3.6%

2002-07-24

-6.4%

2001-02-16

-4.0%

2001-09-11

4.8%

2008-11-13

3.5%

2000-02-04

-6.3%

2008-10-15

-3.9%

2008-10-07

4.8%

1998-10-15

3.5%

2008-11-24

-6.2%

1997-10-27

-3.9%

2008-11-19

4.5%

2020-03-25

3.5%

2000-04-17

-6.0%

1998-08-27

-3.9%

2008-09-09

4.3%

1982-10-12

3.5%

2009-05-19

-5.7%

2008-10-22

-3.8%

1980-10-30

4.2%

2008-01-22

3.4%

2000-04-18

-5.6%

2008-10-10

-3.8%

2009-01-20

4.2%

2000-10-31

3.4%

2009-03-12

-5.5%

2000-04-14

-3.8%

2009-02-23

4.2%

2000-12-08

3.3%

2022-11-10

-5.4%

2009-03-02

-3.8%

1979-10-22

4.1%

2008-09-30

3.3%

2020-04-17

-5.3%

1980-03-27

-3.8%

2020-04-01

4.1%

2009-03-10

3.3%

1998-09-23

-5.3%

2008-11-12

-3.7%

2009-01-07

4.1%

1998-09-08

3.2%

2000-06-01

-5.3%

2008-10-06

-3.7%

2009-05-13

4.1%

2008-11-04

3.2%

2000-04-25

-5.3%

2020-03-23

-3.6%

1988-01-08

Source: Created by author using data from Yahoo Finance.

©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

7

TRUST & ETHICS Next, let’s rearrange the 50 best and 50 worst trading days (100 days in total) in chronological order to highlight some key observations. The dashed lines emphasize periods of market turmoil in which large positive and large negative changes occurred in close proximity to each other.

Figure 3

50 Best and 50 Worst Days in Chronological Order Return

Date

Return

Date

Return

Date

Return

Date

-3.8%

1979-10-22

3.4%

2000-04-18

9.8%

2008-10-14

3.4%

2009-03-12

-4.2%

1980-03-17

3.2%

2000-04-25

-6.3%

2008-10-15

5.3%

2009-03-23

-5.3%

1980-03-27

3.2%

2000-06-01

7.2%

2008-10-20

3.9%

2009-05-04

5.1%

1980-03-28

-8.1%

2000-10-25

-4.4%

2008-10-21

-3.7%

2009-05-13

-3.8%

1980-10-30

4.2%

2000-10-31

-5.7%

2008-10-22

3.5%

2009-05-19

-4.4%

1981-09-25

3.7%

2000-12-05

-8.1%

2008-10-27

-4.4%

2009-06-22

3.8%

1982-01-28

4.2%

2000-12-08

7.2%

2008-10-28

-4.0%

2011-08-08

4.3%

1982-10-12

3.8%

2001-01-03

3.8%

2008-10-29

3.8%

2011-08-09

-11.1%

1987-10-19

-6.4%

2001-02-16

3.7%

2008-10-30

4.0%

2011-11-30

-6.9%

1987-10-20

4.0%

2001-04-18

4.1%

2008-11-04

-10.3%

2020-03-09

9.0%

1987-10-21

-4.0%

2001-09-11

-5.3%

2008-11-12

-4.6%

2020-03-11

-4.3%

1987-10-22

3.6%

2002-07-24

4.8%

2008-11-13

-12.3%

2020-03-12

-7.6%

1987-10-26

4.0%

2002-10-15

-3.9%

2008-11-19

9.7%

2020-03-13

5.1%

1987-10-30

-4.7%

2008-01-21

-9.0%

2008-11-20

-9.9%

2020-03-16

-3.6%

1988-01-08

4.2%

2008-01-22

5.6%

2008-11-21

-7.6%

2020-03-18

-6.2%

1997-10-27

-3.9%

2008-09-09

3.5%

2008-11-24

3.8%

2020-03-19

-6.0%

1998-08-27

-4.0%

2008-09-15

5.9%

2008-11-28

-5.3%

2020-03-23

-4.1%

1998-08-31

7.0%

2008-09-19

-9.3%

2008-12-01

12.0%

2020-03-24

4.1%

1998-09-08

-6.9%

2008-09-29

5.5%

2008-12-08

4.5%

2020-03-25

3.3%

1998-09-23

4.1%

2008-09-30

3.9%

2008-12-29

-5.1%

2020-03-27

4.8%

1998-10-15

-6.9%

2008-10-02

-3.7%

2009-01-07

-3.8%

2020-04-01

3.9%

2000-01-07

-5.3%

2008-10-06

-3.8%

2009-01-20

5.1%

2020-04-06

3.5%

2000-02-04

-3.9%

2008-10-07

-3.8%

2009-02-23

3.3%

2020-04-17

-5.5%

2000-04-14

-4.5%

2008-10-09

-5.4%

2009-03-02

-4.1%

2020-06-11

3.5%

2000-04-17

-5.6%

2008-10-10

4.1%

2009-03-10

3.3%

2022-11-10

Source: Created by author using data from Yahoo Finance.

October 1987 contains six of the largest daily moves, including

The global financial crisis period between September 2008 and

Black Monday (October 19, 1987) when stock markets worldwide

March 2009 contained a whopping 37 of the largest daily moves!

crashed. Over this two-week period, consisting of ten trading days,

Again, the markets swung between losses and gains during this

markets oscillated between large gains and large losses. It would

entire period. It would be virtually impossible for an investor to

be extremely unlikely that an investor during this period would

miss the seventeen best days without missing many of the

miss only the large gains (October 21 +9.0 percent; October 30

twenty worst days during the turmoil.

+5.1 percent) without also avoiding at least some of the large losses (October 19 -11.1 percent; October 20 -6.9 percent; October 22 -4.3 percent; October 26 -7.6 percent).

8

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

The pandemic-related market turmoil in March/April of 2020 also

recover from a 5 percent loss. In fact, a 5.26 percent gain is required

exhibits a similar pattern. The six best days during this period were

to restore a 5.00 percent loss. Considering this math, missing the worst

co-mingled with eight of the worst days. Investors very rarely jump

days should lead to better results than participating in the best days.

in and out of the market. But even if they did, it’s highly unlikely

The investment industry and financial advisors have an important

they would be at risk of missing only the best days in the market.

role in educating clients about the unintended consequences of

An oversimplified chart that completely ignores risk management

market timing and the importance of staying committed to a long-

By focusing only on the best days, these charts completely ignore

clients trust us to offer fair and balanced information and advice.

the beneficial impact of missing some of the worst days. An investor who stayed invested through the best days likely also experienced significant portfolio drawdowns, offsetting much of the potential gains. By missing some of the worst days in the market an investor would better preserve their capital and generate better returns than they would by staying fully invested.

It’s also worth noting that gains and losses aren’t equal. The average daily return of the best 50 days is +4.76 percent, while the median return is +4.05 percent. Meanwhile, the average daily return of the worst 50 days is -5.70 percent, while the median return is -5.19 percent. And a 5 percent gain does not help a portfolio fully

term investment plan. We are held to high ethical standards as Since the best and worst days often occur close together, a chart that only shows the consequences of missing the best days is misleading. Investment firms should stop producing this chart and financial advisors should stop showing it to their clients.

Kamran Khan, CFA, has over twenty years of experience in investment management, with over ten years managing U.S. and global equities. He is currently Managing Director of Khan Financial, which offers financial advisory and consulting services. Kamran is also registered with Security Financial Private Investment Counsel as a Portfolio Manager and the firm’s Chief Compliance Officer.

He is the volunteer Past Co-Chair of CFA Society Toronto’s Member Communications Committee.

Your source for relevant investment insights, analysis and thought leadership from our portfolio management teams.

ScotiaGAM.com

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The Analyst | December 2024

9

2024-09-13 3:44 PM

ETHICS CHALLENGE

Let’s get ethical | Reflecting on a decade of the CFA Societies Canada Ethics Challenge Contributed to The Analyst by CFA Societies Canada Many people within the investment community are familiar with CFA Institute’s mission to promote the highest standards in ethics, education, and professional excellence worldwide. CFA Institute, CFA Societies around the globe, and CFA charterholders work to promote best practices within the investment profession. For some investment professionals, that journey begins before they finish their undergraduate programs.

The CFA Societies Canada Ethics Challenge can help participants to:

Ten years ago, in 2014, the first Ethics Challenge took place in Toronto, with three student teams participating, each from a CFA Institute University Affiliation Program university in Toronto. This evolved quickly, and by 2017, the twelve member Societies across Canada hosted the inaugural CFA Societies Canada Ethics Challenge. Today, teams from all over Canada are preparing to participate in the 2025 CFA Societies Canada Ethics Challenge.

• Develop their resume/CV

What is the CFA Societies Canada Ethics Challenge?

The CFA Societies Canada Ethics Challenge is designed to increase students’ awareness of the ethical dilemmas and issues they may face as investment management professionals.

Student teams are given an ethics case to analyze and evaluate. They have three weeks to work together before presenting their analysis and recommendations and participating in a question-and-answer period to a panel of judges selected by their local host CFA Society. Judges are provided with a grading rubric to evaluate teams based on the quality of their understanding of the ethical issues involved, their recommendations, and the quality of their analysis, presentation, and responses to the judges’ questions. Local champions compete in a National Ethics Challenge Round, where they are given a new case to present.

10

•T ake the first step in the path toward becoming a CFA charterholder • Gain practical training on real-world ethical dilemmas and how to handle them • Augment classroom learning by combining theory and practice • I mprove their professional presentation and teamwork skills •S howcase their university on a local and national scale • Receive hands-on mentoring •N etwork with professionals and peers to make in-roads to the industry

Why participate?

Lou Richard, a student participant on the 2024 CFA Societies Canada Ethics Challenge Championship team from HEC Montréal says, “During the winter of 2023, I completed an internship in ethics and compliance at CDPQ. When I read the description of the CFA Societies Canada Ethics Challenge, I saw many similarities with the work I had done during my internship.” Richard felt her internship would allow her to bring a unique skill set and perspective to her student team. Like many post-secondary students, the potential real-life application of the Ethics Challenge inspired Richard to sign up.

Richard attributes her team’s success to their strategy, where they divided up the CFA Institute Code of Ethics and Standards of Professional Conduct so each student could be a champion for their section of the standards.

Hassan Mehdi was a student participant on the 2023 CFA Societies Canada Ethics Challenge Championship team from Edwards School of Business at the University of Saskatchewan. He decided to join the Ethics Challenge thanks to Associate Professor Brian Lane, CFA, and his infectious enthusiasm about learning and business ethics.

©

Working as a small team with just three members (student teams can range in size from three to five members) and two student members in active co-op placements during the challenge, Mehdi attributes their success in the challenge to mastery of time management. Mehdi says the Challenge taught him to consider the nuances within people’s moral and ethical compasses, saying, “Everyone has their justifications and definitions of what is morally correct and what is ethically correct.” Mehdi took his role of playing devil’s advocate seriously, along with his teammates, allowing them to discuss, debate, define, and fully understand the intricacies of their case.

He also talks about the real-world experience that went hand in hand with the challenge as second- and third-year university students, including flying to Winnipeg to participate in the local round of the competition.

Elvis Picardo, CFA, CIM, a volunteer judge from CFA Society Vancouver for the 2024 CFA Societies Canada Ethics Challenge National Round, reinforces student sentiments. Picardo describes the Ethics Challenge as providing the opportunity for participants to discuss finely nuanced ethical issues in a collaborative environment. “In the real world, ethical dilemmas often demand an instantaneous response or a decision that must be made under tight time constraints. By analyzing complex ethical cases, presenting them, and answering probing questions from the Ethics Challenge’s judges, participants learn how to think on their feet. They also garner insights into ethical issues that will be invaluable to them in their professional careers.”

Richard says that the CFA Societies Canada Ethics Challenge is a valuable experience for anyone looking to familiarize themselves with the world of finance and the CFA charter.

There is so much to gain from the experience.

For Richard, the Ethics Challenge reinforced that “We are all human and make mistakes; what matters most is how we are able to learn and grow from them.”

Get involved If you want to find out more about volunteering as a judge for your local Ethics Challenge or how to enter a student team into the Ethics Challenge, please get in touch with your local CFA Society or info@cfacanada.org.

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

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11

BOOK REVIEW

Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor

by Stephen Foerster Reviewed by Rossa O'Reilly, CFA

The Prussian statesman and unifier of

Eight heroes are profiled: Quintus Fabius,

Germany, Otto von Bismarck, reportedly

Muhammad Ali, Bobby Bonilla (former New

said, “Any fool can learn from his mistakes.

York Mets player), Dennis Gilbert (Bonilla’s

A wise man learns from the mistakes of oth-

agent), Harry Markopolos (discoverer of the

ers.” Stephen Foerster’s book, Trailblazers,

Bernie Madoff fraud), Hetty Green (legend-

Heroes, and Crooks: Stories to Make You a

ary value investor), the legendary Warren

Smarter Investor, is rich in cautionary tales of

Buffett, and Karsten Mahlmann (chair of

the mistakes of others, told with thoughtful

the Chicago Board of Trade), along with six

insights and accurate details. It should make

crooks: Ponzi-schemer Bernie Madoff, Sam

a profound impression on today’s readers and

Bankman-Fried (perpetrator of the FTX Trad-

bring back pointed memories to those who

ing crypto-exchange fraud), John Blunt (a

lived through the events recounted.

director of the South Sea Company), Tino De Angelis (of the Great Salad Oil Swindle), and

Thought-provoking and entertaining

Mike de Guzman (the geologist at the heart

The book aims to show how we can control

of the Bre-X scandal).

our emotions and biases to become smarter

The lessons to be learned are that it pays to

investors and develop a sounder investment

be diversified, to have a strong foundation

philosophy based on the trials, tribulations,

of stocks and bonds, and to emulate the

missteps, and victories of the investors who

strategies and approaches of those worthy

came before us. Its stories cover 2,000 years

and accomplished investors Stephen Foerster

and take place all over the world, including

Seven trailblazers are featured: Harry

the Roman Empire in the second century BCE

Markowitz (developer of the Modern

(Dictator Quintus Fabius’ concept of masterly

Portfolio Theory), William Sharpe (creator

inactivity in the Second Punic War), Venice in

of the capital asset pricing model), Jack

1172 (Doge Vitale Michiel’s clever borrowing

Bogle (founder of the Vanguard Group

scheme to fund the city-state’s investments),

and creator of low-cost index funds),

the UK in 1720 (the Blank-Cheque Swindle),

Charley Ellis (dubbed “the Wisest Man on

Switzerland and France in 1759 (novel invest-

Wall Street” by Money magazine), Jacob

ment strategies in tontines and annuities),

Bouthillier Beaumont (exploiter of opportu-

Massachusetts in 1780 (a revolutionary in-

nities in tontines and annuities), Lawrence

novation to fight inflation), New York City in

Sperry (the early 20th century inventor of

1907, 1987, and 1999 (stock market crashes

autopilot functions), Doge Vitale Michiel of

and bubbles), New Jersey in 1964 (the Great

twelfth century Venice, and legislators for

Salad Oil Swindle), Indonesia in 1996 (the

the Commonwealth of Massachusetts in

Rossa O’Reilly, CFA, is a Past Chair of

Bre-X gold fraud), Budapest in 2021 (foot-

the eighteenth century.

CFA Institute, Past President of CFA Society

baller Christiano Ronaldo’s press conference

calls heroes. Importantly, investors need to be mindful that unscrupulous participants are trying to play off our emotions and biases.

We must beware of false promises.

Novices and experienced investors alike will find Stephen Foerster’s book both thoughtprovoking and entertaining. A great stockingstuffer for the holiday season!

Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor, by Stephen Foerster, was published in 2024 by John Wiley and Sons Inc., Hoboken, New Jersey, USA.

Toronto, and former Managing Director

involving Coca-Cola bottles) among other

of Institutional Equities at CIBC World

times and places.

Markets Inc.

12

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

13

AWARDS

Hillsdale Investment Management – CFA Society Toronto Research Award Useful findings from a Canadian-based study of the relative performance of the major asset-pricing models

by Rossa O’Reilly, CFA

L-R: Oumar Sy; Harry Marmer, CFA, Executive Vice President, Hillsdale Investment Management; Kodjovi Assoe, CFA; Chris Guthrie, CFA, President & CEO, Hillsdale Investment Management. (Absent: Najah Attig)

The winners of the 2024 Hillsdale Investment Management

Their work adds significant value for several reasons:

– CFA Society Toronto Research Award are Kodjovi Assoe, PhD,

1. It focuses on a single country, permitting a more homogeneous

CFA, School of Management, Université du Québec à Montréal; Najah Attig, PhD; and Oumar Sy, PhD, Faculty of Management, Dalhousie University, for their research paper entitled Navigating Canada’s Factor Zoo.

sample concerning financial and economic development, legal structure, corporate governance, and industrial structure, which may affect the relevance of factors in expected returns.

2. Non-US evidence adds value, as existing literature focuses mainly

Asset pricing factors are essential tools for investment managers,

on US data.

providing valuable insights into the underlying drivers of asset re-

3. International asset-pricing studies tend to overlook the need for

turns, security selection, and portfolio construction. Exploration of

country-specific results. For example, blending the Canadian

asset-pricing factors originated in the early 1960s when the capital

market, which accounts for around 3 percent of the world market,

asset pricing model (CAPM) of William Sharpe, subsequent Nobel

with the world’s largest market in the North American region

Prize winner, and John Lintner posited that only sensitivity to the

does not bring out the specifics of the Canadian market because

market factor determines differences in expected returns among

the US data may dominate all the factors. Canadian markets differ

financial securities. Empirical research in the 1980s and 1990s

significantly from their US counterparts in size, scope, industry

challenged this prediction, and Eugene Fama and Kenneth French

structure, corporate governance, and regulatory environment,

introduced factors related to firm size and value, resulting in a three-

which may influence market preferences for specific factors.

factor asset-pricing model. This was followed by a five-factor model

It is noteworthy in this context that ownership concentration is

incorporating profitability and investment as additional factors.

higher in Canadian firms than in US firms, and the Canadian

Since then, asset-pricing research has evolved into a battleground of

corporate governance regime is perceived as weaker than its

factor models, each striving to refine our understanding of expected

US counterpart. These differences may influence market prefer-

return determination.

ences, leading to a valuation discount for equities listed in Canada compared to those cross-listed in the US and Canada.

The “Factor Zoo” The comparison of different asset-pricing models has recently brought critical empirical attention to determining which factors

A six-factor model proves effective for pricing in Canadian markets

best explain expected returns. Hundreds of factors have been pos-

Overall, the award winners’ analysis of a wide-ranging set of old

ited, and the identification of the most pivotal factors is a focal point

and new factors reveals the prominence of a six-factor asset-pricing

of ongoing research, debate, and controversy. In his American Fi-

model (SFPM) for explaining asset return behaviour in Canada. This

nance Association Presidential Address in 2011, US economist John

SFPM effectively prices Canadian securities, combining market, size,

H. Cochrane, author of the book Asset Pricing, termed the plethora

monthly updated value, return on equity, expected growth, and

of asset-pricing factors the “factor zoo.”

post-earnings announcement drift (PEAD) factors. Robustness tests confirm the non-redundancy of these factors in explaining Canadian

The award winners’ research delves into the battle of factors in Canadian capital markets, employing spanning tests to evaluate seventeen factors from ten factor models for 1991–2022. It contributes to the literature in this field by providing Canada-based evidence on the relative performance of the major asset-pricing models.

14

©

returns. The SFPM emerges as the top performer in explaining documented anomalies in the Canadian markets, outperforming other available models in most metrics. While it fails to explain the extreme return differentials of portfolios sorted by value, it contributes significantly to defining the profitability of market anomalies in Canada.

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

The researchers’ findings highlight the value of the newly proposed

Chris Guthrie, CFA, CEO of Hillsdale Investment Management,

factor models in capturing unique market dynamics and emphasize

commented, “With test results from 1991 to 2022, this award-

the need for a comprehensive asset-pricing approach tailored to the

winning paper provides an excellent reminder of the skills required

Canadian market. Their conclusions carry significant implications for

to successfully navigate all equity markets today. Attention to local

investors, emphasizing the importance of a diversified approach to

market conditions, knowledge of investor preferences, frequent

factor investing, incorporating timely information into investment

updates of valuation data, determination of relevancy, as well as

decisions, and considering the impact of construction methods on

both model diversity and parsimony are just a few of the highlights

factor estimation and significance.

of the authors’ findings. Most importantly, many traditional factors

A valuable tool for navigating the complexities of the Canadian markets

once thought to be drivers of Canadian equities are shown to be subsumed over this recent time period. Truly a must-read for any Canadian equity manager or manager of managers.”

The SFPM, designed with practitioners in mind, offers practical applicability by incorporating relevant factors essential for effective

The Hillsdale Investment Management – CFA Society Toronto

asset pricing in Canada. It serves as a valuable tool for investors

Investment Research Award is open to researchers globally who

navigating the complexities of the Canadian market, albeit with

conduct research related to Canadian capital markets, including

considerations for real-world implementation challenges. By inte-

both academics (e.g., professors and students) and practitioners.

grating factors from various models, their study demonstrates the

Author(s) of the winning research paper are awarded CA$10,000.

importance of combining factors to provide a more comprehensive

Research papers are reviewed by a panel of CFA charterholding

understanding of stock market intricacies. The study adds to the

investment experts to ensure they align with the rigorous values

literature by providing insights into the relevance of and interactions

and standards embodied in the CFA designation.

among prominent factors. This emphasizes the need to assess the performance of asset-pricing models in diverse contexts and

Rossa O’Reilly, CFA, is a Past Chair of CFA Institute, Past President

underscores the value of combining factors from different mod-

of CFA Society Toronto, and former Managing Director

els to encapsulate stock market intricacies. This understanding is

of Institutional Equities at CIBC World Markets Inc.

crucial for researchers seeking to construct comprehensive models and practitioners aiming to develop effective investment strategies in diverse financial environments. Future research will undoubtedly explore additional factors and refine existing models to further enhance our understanding of asset-pricing dynamics in various contexts. The award judging panel commended the high quality of the award winners’ academic research and cited it for being both

Scan to read the winning paper: Navigating Canada’s Factor Zoo

“actionable” and “Canadian market specific.”

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©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

15

EVENTS

Learning to lead Lessons from the Annual Future Leadership Forum

by Walter de Wet, CFA The Annual Future Leaders Forum, hosted

by CFA Society Toronto’s Professional Development Committee, is a popular event among professionals looking to develop their leadership skills. At a soldout venue in June, industry leaders from BlackRock, RBC Global Asset Management, iA Global Asset Management, Canada Life, and MSCI shared their insights and personal leadership journeys.

Continuous personal growth Personal growth is fundamental to effective leadership. Leaders must continuously challenge themselves, take calculated personal risks, and reinvent themselves, pushing beyond their comfort zones to develop new skills and perspectives. Ongoing selfimprovement does not only happen within the workplace context but is often fuelled by active involvement in the community, where

The keynote session focused on “The Path

leaders can gain fresh insights that enhance

to Leadership” and featured Marcia Moffat,

their impact.

Country Head of Canada at BlackRock. Other sessions at the forum focused on delivering effective presentations to senior leaders, elevating yourself and your team, and mastering the art and science of managing a team.

prove their commitment and capabilities, garnering the trust and support necessary to advance their initiatives and drive organizational success.

Communication with senior leadership is key Any leader, whether still in development or already proven, will need to learn the skill of effective communication. Effective communication with senior leadership hinges on clear communication and strategic planning.

Leadership extends beyond managing people; it encompasses inspiring and influencing others. As one advances as a leader, influence and impact naturally expand, requiring the leader to adopt a broader, more integrative approach to management and

We provide our key takeaways from the

problem-solving. And as influence expands,

insights shared by the speakers at this

it is important to remember that leading by

multiple-session event.

example sets the tone for expectations and

Shift the focus to the team

growing sponsorship, as it allows leaders to

behaviours.

Here are some tips: 1. Ensure that you convey the right information within the allotted time. Consider your audience's perspective, constantly asking why each piece of information is necessary. Define success by delivering a handful of key messages that support your main points. Start by outlining what you will cover, present your content, and conclude by reiterating the key takeaways.

A common thread across the speakers was

Influence and visibility

that leadership entails a shift from focusing

The debate between generalists and spe-

sessions with peers can help you antici-

on individual achievements to highlighting

cialists becomes particularly relevant as one

pate and prepare for tough questions. If

and elevating the team's collective success.

ascends into leadership roles. Its important

you meet a question you cannot answer,

Within the team context, the leader's role is

that a leader is comfortable evolving into

admitting you don't know and commit-

to recognize and amplify individual contribu-

a generalist who can connect the dots

ting to follow up is acceptable.

tions that aided the team. This transition can

across various domains and facilitate holistic

be challenging, as managing a team requires

decision-making. This ties closely with the

balancing diverse personalities, skills, and

skills of influencing others and the shift from

motivations. Effective leaders must learn to

focusing on the individual to the team.

foster a collaborative environment where each member feels valued and empowered.

By doing so, they create a cohesive unit capable of achieving greater results than any single individual could alone.

In fact, influence without authority is a powerful tool in a leader's arsenal, enabling them to rally support and drive initiatives through persuasion and vision. Building consensus often involves having "the meeting before the meeting" to secure buy-in and align stakeholders. Visibility is crucial for

16

©

2. Knowing your audience is crucial; practice

Build relationships, build a franchise, find a mentor and a sponsor To effectively evaluate yourself and your team, it is crucial to find a mentor and a sponsor. They do not need to be the same person. The mentor and the sponsor will provide different perspectives and support you in navigating challenges. A mentor is someone who provides advice and guidance, while a sponsor is someone who believes in your ability and advocates for you.

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

At the same time, you need to develop and own your franchise.

That means taking responsibility and initiative in driving progress and outcomes. Building a network is key for this: be intentional in fostering connections and managing upward relationships to gain valuable insights and support.

Managing a team: Set the rules, align the goals

Investment specialization and global scale

Managing a team requires setting clear expectations from the start. Know that difficult conversations are inevitable, so before these conversations, establish rules upfront; acknowledge team members' ambitions and desire for growth while emphasizing honesty and transparency. Goal alignment is crucial; ensure everyone understands and contributes to the team's common goals.

Providing honest feedback is key. Practice giving constructive criticism, and deliver it promptly. Avoid favouritism by measuring all team members against the same standards, fostering fairness and reducing ambiguity.

Regularly provide feedback to individuals based on their performance and openly recognize achievements. By cultivating a culture of transparency, fairness, and continuous improvement, you can effectively manage a team and nurture growth.

Don’t know where to start? How about volunteering?

Volunteering serves as a practical platform for honing leadership skills. Here, it is easy to share credit, and it fosters camaraderie and motivation. By volunteering, you can learn to manage time efficiently, which is essential for productivity and goal achievement. By aiding others and achieving small goals, it’s a good place to embrace a success-oriented mindset and a good training ground to learn how to deal with setbacks, as it fuels resilience and growth.

The best of both worlds for better outcomes We offer Canadian investors the best of both worlds—global strength and investment specialization.

Our specialized investment managers offer diverse strategies across sectors, regions, asset classes, investment style and sustainability capabilities.

Backed by global resources in risk management, data and analytics.

Investment specialization and global scale: That’s how we aim to deliver better outcomes for our clients.

Learn more at franklintempleton.ca

Walter de Wet, CFA, is a Senior Strategist at Nedbank CIB Global Markets. Walter is the volunteer Chair of CFA Society Toronto’s Member Communications Committee.

Learn more about volunteering opportunities with CFA Society Toronto at

www.cfatoronto.ca/Volunteer

© 2024 Franklin Templeton. All rights reserved. ©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

17

CHARTERHOLDER PROFILE

The Higgins Family’s shared journey to CFA success How family discussions inspired a shared pursuit of the CFA charter and thriving careers in finance

by Sara Maginn Pacella

When people talk about family traits, they usually talk about dimples or hair colour. For the Higgins family, however, a defining familial trait is their collective passion for the investment and financial services industry and a shared pursuit of the CFA charter—a bond that sets them apart and unites them as a distinctive family.

Gordon Higgins, a seasoned investment professional with over 30 years of experience and a CFA charterholder since 1990, and his wife Beverley, who has also enjoyed a prosperous career in finance, have inspired their three children, Nicole, Graeme, and Elliot, to follow in their footsteps and pursue their Chartered Financial Analyst designations and careers in the industry.

In this special charterholder family profile, we explore what drives the Higgins family toward careers in finance, showcase how they motivate and support each other personally and professionally, and highlight their individual career and educational journeys.

Chartering a familial pursuit of careers in finance The Higgins family members were drawn to the CFA designation for various reasons, including gaining a more holistic understanding of the investment industry outside of their respective roles, proving their tenacity and dedication to employers, and learning more about ethics. Gordon always had an interest in the markets and compares having a career analyzing stocks to getting paid for a hobby.

Gordon prides himself on leading by example, with his children noticing how he enjoyed his career and the value he found in working towards earning his CFA designation even after earning a bachelor of commerce, master of business administration (MBA), and Chartered Professional Accountant (CPA) certification.

Elliot, the youngest member of the Higgins family, traces his interest in finance to a young age when he went to a live taping on BNN featuring his dad, which was later cemented by seeing his siblings pursue their charters.

Gordon jokes that not all the Higgins children were instantly enamoured with the investment industry, recalling another time he was featured in a guest spot on television.

“When my wife tried to turn on the TV, my daughter Nicole said, ‘I can see dad any time, but Barney is on at noon.’ Barney won.”

Sage advice As his grown children each began pursuing careers in investment, Gordon reiterated two critical pieces of advice: 1. Find a job you like, and it will not seem like work.

2. It takes 30 years to build a reputation, and 30 seconds to lose it.

Sibling study tips As the Higgins children each prepared for the exam, they ensured their siblings understood the weight of the time commitment required and the critical role time management plays in prioritizing and allocating your exam preparation. They reminded each other that working a little harder in your preparation is well worth not having to repeat an exam.

L-R: Gordon, Elliot, Nicole & Graeme Higgins.

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

What inspired you to start your own firm?

They also emphasized the importance of practice questions as a part of exam preparation, as you must be able to apply your knowledge, and no amount of reading can prepare you if you are unfamiliar with the CFA exam questions and wording.

Encouragement from family members to stay committed through the finish line greatly influenced each family member's progress in the program.

I had no plans to start my firm until someone approached me to manage their investments. They had moved on by the time I got set up and had all the regulatory approvals, but others contacted me once I was registered, and it grew from there.

What do you think makes your investment process successful?

Moving beyond financial family traits The family credits each member’s success pursuing a career in the investment industry to their keen interest in analysis along with an expansive diversity of opportunities.

Gordon says, “I look at us, and one has their own firm, one works for a bank, one works for a mortgage brokerage, and one works at a single-family office. Each of us has found a work environment that allows us to use the skills and knowledge presented in the CFA Program.” Before she transitioned out of her professional career to raise their children, Beverely Higgins worked as an Associate Partner of Finance and Accounting for the credit card and mortgage unit of Royal Trust.

The family also credits their support for each other as a driving factor behind their successes. The family usually goes out for a meal on the weekend to discuss career and personal matters, and everyone knows that they can reach out to each other for advice.

Nicole is proud of how the family celebrates each other’s achievements, fostering an environment of open communication and growth. Each family member has security that the others will encourage them to pursue their ambitions, knowing that they all have each other’s backs. At the end of the day, they all want what’s best for their family, in and out of the office.

©

Gordon Higgins,

CFA, CPA, MBA

Career Highlights • Founder and Chief Investment Officer, Chief Commercial Officer, and Portfolio Manager at Higgins Investment Group Inc. (Est. 2010) • Over 30 years in progressively senior roles in the investment industry including roles as: – Senior Vice President, Sentry Investments – Vice President, North American Equities, MD Private Investment Management/Howson Tattersall – Vice President, Canadian Equities, Manulife/Elloitt & Page – Portfolio Manager, Aetna Capital Management • CFA charterholder since 1990 •M aster of Business Administration, Investments and Securities, Schulich School of Business, York University

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

One factor that makes my investment process successful is that it has been honed over several decades. I do not focus on near-term returns, but on longterm sustainable returns. I know my strengths and weaknesses. It can take time for a good investment to provide solid returns. I worry about the potential downside of an investment as much as about the potential returns.

How have you influenced your children professionally?

At times, you do not know that your actions influence your kids. I often talked about my day at work over the dinner table. One day, one of my children, who was in kindergarten, asked me how the Canadian dollar had moved that day, and we talked about it in detail. Small moments like this show how what you say influences your kids.

How do you stay current with industry trends and developments, and what resources do you find most helpful?

I use a variety of sources to keep up with the industry. You can start with the Financial Analysts Journal and move through other industry publications.

Even the daily newspapers can highlight something of interest happening in the industry that can lead you to other sources.

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CHARTERHOLDER PROFILE What skills or traits do you believe are most important for success in the finance industry, and how have you developed those skills?

How do you stay current with industry trends and developments, and what resources do you find most helpful?

I regularly engage with financial news outlets and participate in webinars and conferences.

I also actively follow thought leaders on platforms like LinkedIn and join professional networks to exchange insights with peers.

Additionally, I dedicate time to continuous learning through CFA Institute's Professional Learning program.

It might seem trite, but ethics is the best starting point. This is a skill you have inherently, but you must ensure you fully grasp the industry and regulatory codes, as everyone has a different definition of what is right.

What are the most notable changes in the investment industry over your career?

Simply put, technology. I remember when the brokers' research was delivered by courier each morning. Each brokerage used different coloured paper to make it easy to identify. I remember calling companies to ask them to get added to the mailing list for annual and quarterly reports. Now, we can access information the instant it comes out.

What's something that you'd like to share that most people don't know about you?

My wife married me for my sense of humour, which others do not always appreciate.

Fun facts Bucket list travel destinations Israel and China. Both countries have long histories and distinct cultures.

Favourite family tradition Enjoying time when the whole family gets together and has nowhere else to go.

The last series you binge-watched Showing my age, I still enjoy watching DVDs of Get Smart.

What are some of your career goals?

Nicole Higgins, CFA Professional & Educational Highlights • Associate, Risk Management, TD • CFA charterholder since 2020 • Certificate in Investment Performance Management, CFA Institute • Bachelor of Commerce, Accounting, with Distinction, University of Toronto

How has the CFA designation helped you in your career?

What's something that you'd like to share that most people don't know about you?

I have a strong passion for knitting and crochet, and it's a creative outlet for me. I enjoy the process of transforming simple yarn into beautiful creations.

The knowledge I learned while studying for the exam prepared me for novel situations, providing me with a broad knowledge base to help me make decisions.

Fun facts

What inspired you to enter the field of risk management?

Bucket list travel destinations Italy, particularly Rome, has a fascinating history and a fantastic food culture.

I have a passion for working with data. When I was first entering the industry, it was an area that would allow me to further develop my understanding of the industry and find specific areas that interested me. However, once I started, I was mentored by senior people on the team and discovered that I had a passion for the constantly evolving nature of the work.

What are your proudest professional accomplishments/career highlights?

I was recognized with an internal, companysponsored award, the Annual Star Award, that recognized the contributions that I had made across multiple projects.

20

My primary career goal is to deepen my expertise in investment risk management, using the skills I learned in the CFA Program.

Additionally, I aspire to take on leadership roles where I can mentor junior professionals, foster a culture of risk awareness within my organization, and highlight the value of the CFA Program.

©

The last interesting series you binge-watched I just finished watching Chimp Crazy, a documentary series about a woman who cared for chimpanzees and how things spiral out of control when animal rights groups and authorities get involved over animal rights violations.

Childhood dream job I wanted a job that would let me travel around the world and go on adventures.

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

What's something that most people don't know about you?

I love movies, and the movie theatre experience is one of my favourite things, as you fully disconnect for a couple of hours.

Fun facts Bucket list travel destinations A trip around continental Europe.

Graeme Higgins, CFA, MBA Professional & Educational Highlights • Investment Specialist, Single Family Office • CFA charterholder since 2024 • Master of Business Administration, DeGroote School of Business, McMaster University

Favourite family tradition Christmas crackers and paper crowns.

The last interesting series you binge-watched Succession and Daisy Jones and the Six. Childhood dream job Defence for the Toronto Maple Leafs.

• Former Associate Advising Representative (Portfolio Manager) & Dealing Representative (Exempt Market Dealer), Ontario Securities Commission (OSC)

What are some of your career goals?

I work for a US-based firm that has had success expanding its Canadian operations, and this is an excellent opportunity to develop internally. I am focusing on originating commercial mortgage financing in the short-term and joining the executive team in the future as we continue to grow across Canada.

What's something about you that you'd like to share that most people don't know about you?

I love golf, but you wouldn't confuse me with Tiger Woods. I set the record for the shortest drive at my company's golf event. However, I love to get out, and I'm always happy when I break 100.

Fun facts Bucket list travel destinations Southeast Asia—several friends have gone there, and the change in culture and scenery are enticing.

What inspired you to become an Investment Analyst?

Favourite family tradition Watching Elf on Christmas Eve. We come home after looking around at all the Christmas lights, we put Elf in the VCR, and the same jokes hit every time

I recently switched roles to Investment Specialist as of the end of September.

However, I became an Investment Analyst because it's interesting to review investment options, as the options constantly change.

The last interesting series you binge-watched I like to rewatch The Office and How I Met Your Mother.

How do you stay current with industry trends and developments, and what resources do you find most helpful?

Childhood dream job Professional hockey player. Those dreams were gone early, so portfolio manager.

• Recipient of Ontario Volunteer Service Award

LinkedIn and social media are excellent sources for articles, allowing users to sign up for mailing lists and stay up to date. I also receive various reports in my role that keep me up to date on industry trends.

What are some of your career goals?

I want to continue to grow and learn to help make meaningful decisions in the long run and be able to use my skills.

©

Elliot Higgins, CFA Professional & Educational Highlights • Analyst, Largo Capital Inc. • Bachelor of Finance, Lazaridis School of Business and Economics, Wilfred Laurier University • CFA charterholder since November 2024 • Recipient of academic bursaries for volunteer work

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Sara Maginn Pacella is a freelance writer and the editor of The Analyst. She has a bachelor of arts in Canadian Literature from York University and a post-graduate certificate in public relations from Toronto Metropolitan University (formerly Ryerson University).

21

INVESTING

Search funds & acquisition entrepreneurship A unique path to entrepreneurship & business leadership

by Joshua Giancola, CFA

A typical path to the pinnacle of business is to climb the corporate ladder to an executive position or create a startup company. Both options carry their own set of opportunities and risks. In recent years, another career route with a direct path to business leadership, known as a search fund, has grown in popularity.

What is a search fund?

A search fund is an investment vehicle through which a small group of

What is the lifecycle of a search fund?

The search fund lifecycle and typical timelines can be broken down into the four stages shown in Figure 1.

Figure 1: The search fund lifecycle Stage 1

investors search for, acquire, and operate a privately held company for the

There are a variety of similarities and differences between a search fund and traditional private equity, with the main difference being post-acquisition operations. A search fund is founded by an individual or team who will operate the acquired business as management throughout the investment horizon. Traditional private equity serves as a financial sponsor of an investment in a business and requires an operational management team for each investment. Additional differences between a search fund and traditional private equity include:

Stage 2

Stage 3

Operate & create value 4-7+ Years

Search for & acquire company 12-24 Months

2-6 Months

medium to long term.1

How is a search fund different than traditional private equity?

Raise initial capital

Stage 4

Exit 6 Months

Source: Kelly, Peter, and Sara Heston. 2022 Search Fund Study: Selected Observations. Case E-807. Stanford Graduate School of Business, 2022.

Stage 1: Raise initial capital A search fund raises capital via a private placement memorandum, developed under experienced legal counsel's guidance. Engaging qualified legal counsel is crucial to ensure compliance with laws and regulations and optimize

Search Fund

Traditional Private Equity

Management

• Fund sponsor as operator

• Independent business operator for each investment

Acquisition Targets

• Lower market (smaller businesses, $0–5 million annual revenue)

• Upper-middle and upper market (mid-size and large businesses, $150 million+ annual revenue)

• Targets a company too small for traditional private equity and too large for individual buyers

• Varied strategies

the legal and tax structure.

Search funds typically raise capital in two tranches: 1. Search capital: Used to fund expenses, including searcher compensation and due diligence costs, during the search for an acquisition target. In exchange for investing in the search capital tranche, investors will typically receive: • The right, with no obligation, to invest in the acquisition capital tranche to consummate an acquisition

Investment Objective

• Concentrated in one business

Investment Horizon

• Medium to long term

Investor Base

• Smaller investor base

• Larger investor base

• High-net-worth individuals and family offices

• Passive limited partners

• Diversified portfolio approach

• Conversion of search capital into securities issued as acquisition capital, typically on a stepped-up basis

• Shorter term • Typically, stricter return of capital timelines

• Actively involved in business as board members, etc.

• Investors do not get involved in operations

2. Acquisition capital: Used to close on the acquisition of a target company Most search fund principals solicit investors with relevant skill sets who can be engaged as advisors. An ideal investor for a search fund can assist with the evaluation and execution of transactions, contribute to business management, and provide leverage with lenders, lawyers, and other service providers.

22

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Stage 2: Search for & acquire company The search and acquisition stage is typically more time consuming than raising

created by increasing revenue, margins,

have resulted in acquisition, and 73 per-

and efficiency; optimizing leverage; adding

cent of those resulted in a positive return.

bolt-on acquisitions; or expanding.

The same study reports that exited search

initial capital and can get sidetracked due to

Searchers are commonly paid an annual

unwilling sellers, regulatory issues, or com-

salary and bonus but are heavily incentiv-

plicated transaction execution. Successful

ized through a carried interest in the invest-

searchers will normally employ a system-

ment, which aligns their efforts to create

ized process to generate deal flow and

value quickly in hopes of realizing increased

analyze opportunities in a way that allows

equity value through an executed exit.

them to quickly accept or reject opportunities before investing significant resources.

Search funds typically target stable and fragmented industries where acquisition targets can be evaluated on their sustainable market position and historical operating performance. The ideal target will have a history of stable operations, positive cash flow, and potential for growth.

When an acquisition occurs, the acquisition capital raised in stage 1 of the search fund lifecycle will be combined with additional financings, such as vendor debt, bank debt, additional equity, or earnouts.

funds received an average internal rate of return of 36.8 percent.3

Does a CFA charterholder have the skills to execute a search fund?

The CFA Program equips candidates with expertise and real-world skills in invest-

Stage 4: Exit

ment analysis. The skills gained from

Even though search funds operate under

the CFA Program will help a prospective

longer-term horizons than other investments, investors will focus on achieving an exit. Principals of the search fund will constantly evaluate exit options while running the business, looking for an ideal time to realize maximum value. Liquidity events can take many forms, including selling to a public company, going public, repaying investor debt, recapitalizing existing investor equity, or selling to another private company or investor.

searcher with fund inception, study of potential acquisition targets, and execution of the acquisition and disposition transaction. Depending on the industry and company acquired, there may be a skills gap in day-to-day business operations, but this can be overcome by stepping into existing processes. A significant benefit of search funds and acquisition entrepreneurship compared to typical startups is that the searcher is acquiring an established operating business with existing cash flow,

The capital structure of closed searches

What returns do search funds generate?

customers, employees, product-market fit,

can vary significantly by industry and capi-

Measuring general search fund returns

and pricing. This allows acquirers to hedge

tal market environment at closing.

is a nearly impossible task, as the funds

Stage 3: Operate & create value

are private with no published benchmark

Once a company is acquired, the search

be a difference in returns for exited funds

fund principals manage day-to-day operations. Search funds rarely pursue turnaround targets, which frequently results in little to no significant business changes in the first two years post-acquisition as new management focuses on becoming familiar with the existing inner workings of the business.2 Once searchers are familiar with current operations, value is typically

index. When measuring returns, there will

downside risk while maintaining upside through carried interest if they can create value for investors.

Joshua Giancola, CFA, is a private equity

compared to operating funds. To further

professional in real estate and member

complicate the situation, some search

of CFA Society Toronto’s Member

funds may never progress beyond the

Communications Committee.

search phase and never acquire a company, resulting in a further drag on returns.

1

A study of search fund returns by the Stanford Graduate School of Business reports that, since 1984, 66 percent of searches

elly, Peter, and Sara Heston. 2022 Search Fund K Study: Selected Observations. Case E-807. Stanford Graduate School of Business, 2022.

2

Kelly and Heston.

3

Kelly and Heston.

Now available!

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2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

23

CAC CORNER

Canadian Advocacy Council quarterly update OSC Proposed Process for Distributing Disgorged Funds

What's new with the CAC?

to Harmed Investors

Advancing investor protection, industry professionalism,

The Ontario Securities Commission (OSC) published for comment a rule proposal to establish a new process for returning money to harmed investors, known as disgorgement.

and market integrity across Canada, the CAC works to focus attention on pressing advocacy files dominating the regulatory agenda. Ensuring fair, equitable, and sustainable outcomes for stakeholders is more important than ever, and through our growing relationships with policymakers and regulators, we are working on several important initiatives.

Following is a summary of two areas where we have recently provided comment letters to consultation processes.

The proposed process would apply when disgorgement is ordered in an enforcement proceeding before the Capital Markets Tribunal or the Ontario Superior Court of Justice and the OSC receives sufficient funds to make a distribution feasible.

The CAC expressed their support for the proposed rules, particularly: • The OSC's ability to distribute funds without a court-appointed administrator where applicable

To see the comprehensive catalogue of our commentary

• The potential for a more efficient and timely process for harmed investors

letters, visit us online at cfacanada.org/advocacy.

Published Canadian Advocacy Council of CFA Societies Canada (the “CAC”) comment letters CIRO Proposed Proficiency Model – Approved Persons under the Investment Dealer and Partially Consolidated Rules

• Consideration of other jurisdictions' frameworks in developing the rules • Allowing investors to also seek redress through civil claims or Ombudsman for Banking Services and Investments (OBSI) complaints without necessarily impacting their rights to seek disgorged amounts

The Canadian Investment Regulatory Organization (CIRO) published for comment its proposed amendments to its proficiency rules applicable to the Approved Persons under the Investment Dealer and Partially Consolidated Rules.

The CAC offered several suggestions to the OSC to enhance the proposed framework, including:

The CAC is pleased that CIRO intends to introduce an exam blueprint or syllabus with information including topic weightings and sample exams, aiming to provide sufficient information to enable self-directed study candidates to reasonably prepare for and pass exams.

• Consulting with organizations like OBSI for expertise in claims adjudication

The CAC acknowledged the changes of dropping the proposed requirement for firm sponsorship as part of exam eligibility but cautioned against unconstrained advertising and business development by exam preparatory vendors and the possibility of misleading representations to industry aspirants.

It is suggested that CIRO introduce training and continuing education components on certain emergent issues and developments relevant to the competency profiles. The CAC also made targeted suggestions around transition relating to the CFA Program.

24

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• Taking on a larger role in distributions to save third-party administrative costs

• Providing published notice with reasons if the OSC decides not to distribute funds due to cost concerns • Setting a high threshold for deciding against funds distribution Regarding notice to harmed investors, the CAC advised that the OSC: • Expand beyond website postings to direct notification of potential claimants • Implement a notice delivery obligation when investor information is available • Amplify awareness through investor protection clinics and outreach initiatives

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Have your say If you would like to participate in advocacy

activity related to these letters or future policy and regulatory initiatives, provide comments on ongoing initiatives, or learn more about volunteer opportunities in advocacy or as a part of the CAC, please contact cac@cfacanada.org.

Proud to support

CFA Society Toronto

Follow CFA Societies Canada on LinkedIn.

Who is the Canadian Advocacy Council?

The Canadian Advocacy Council (CAC) is a volunteer advocacy council of CFA Societies Canada, representing the twelve Canadian CFA Institute Member Societies and, ultimately, Canadian CFA charterholders. The council includes investment professionals from across the country who review regulatory, legislative, and standardsetting developments affecting investors, investment professionals, and Canadian capital markets. The CAC strives to advance market integrity, transparency, and investor protection, and actively engages Canada’s securities regulators, self-regulatory organizations, industry associations, legislators, and other stakeholders through thoughtful leadership, direct engagement, and the publication of comment letters.

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Commissions, management fees and expenses all may be associated with an investment in products (the “Global X Funds”) managed by Global X Investments Canada Inc. The Global X Funds are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the Global X Funds. Please read the relevant prospectus before investing. ©

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25

Advertorial

Strategies for a new rate reality

For investors, the challenge lies in predicting what might work "this time around." With interest rates heading downward, business sectors that once thrived may face headwinds, while others that struggled could begin to shine. Staying disciplined and maintaining a well-thought-out asset allocation strategy becomes even more essential in such uncertain times, as this ensures that the risk/return profile of an investment portfolio remains aligned with its objectives.

Chris McHaney, CFA Executive Vice President, Head of Investment Management and Strategy Global X Investments Canada Inc.

Importance of Asset Class Mix

Key Takeaways • The U.S. is entering a rate-cutting regime.

• Strategies that worked in recent years may not work going forward.

• U.S. equity valuations are high but they are lower internationally.

• Fixed income duration – the market has been very short duration, may make sense to add duration back into the portfolio.

•Sectors in Focus: Utilities, Consumer Staples.

Why invest in US small- and mid-cap equities?

Smaller US companies are the lifeblood of the US economy. While they don’t get the same sort of media exposure as Apple or Microsoft, these companies span the gamut from agricultural and construction machinery to airplane parts to specialty chemicals and everything in between. These companies also have a bias toward the strong US economy, and they should benefit from the “onshoring”/”reshoring” of US industries.

The most significant determinant of portfolio risk is the asset class mix—the allocation of investments across equities, fixed income, commodities, and other asset types. As the largest driver of portfolio performance, ensuring that the asset mix remains aligned with investment goals is critical. An optimal asset allocation strategy must adapt to changing market conditions, especially in response to major policy shifts like the current rate-cutting regime.

A diversified asset mix allows investors to mitigate risk while optimizing returns.

Amidst uncertainty, having exposure to different asset classes enables portfolios to withstand volatility and capitalize on opportunities that emerge across the financial landscape.

Fixed Income: A Core Component Incorporating fixed income into a portfolio serves as a stabilizing force, particularly in times of economic uncertainty or during shifts in monetary policy.

However, recent years have shown that not all fixed income investments perform equally across various stages of the economic cycle (see chart below). Different segments of the fixed income curve—such as short-term versus long-term bonds— can present both opportunities as well as risks at different times.

A recent shift in U.S. rate strategy could significantly alter market leadership and investment strategies. Understanding how to navigate this changing landscape is crucial for investors looking to optimize their portfolios while maintaining a disciplined approach.

The U.S. Federal Reserve's (“Fed”) 50 basis-point reduction in its target rate on September 18 ushered in a new era for the U.S. economy. The change represents a sharp pivot from recent years, which was marked by a steady tightening of financial conditions, pushing short-term interest rates to levels exceeding 5%. Now, with the tide turning, investors face a vastly different environment where market drivers could be fundamentally altered.

26

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However, by maintaining broad-based fixed income exposure, investors ensure that some portion of their fixed income allocation is consistently “working” regardless of market conditions. This broad approach provides flexibility for active investors to make tactical tilts, allowing them to adjust exposures according to their views on interest rates, inflation, or economic growth. For instance, in a declining rate environment, investors might prefer longer-duration bonds that tend to gain value as rates fall.

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

Geographic Diversification On the equities side, geographic diversification emerges as a powerful tool for managing risk. By spreading investments across different regions, investors reduce exposure to market-specific or idiosyncratic risks that can be tied to political, economic, or regulatory factors. This diversification approach can help smooth out portfolio performance, even when certain markets face turbulence.

The Fed’s new monetary policy era is prompting investors to reassess their strategies. In this environment, maintaining a diversified portfolio that includes broad-based fixed income and geographically diverse equities is essential.

Rate-sensitive sectors like utilities and consumer staples, as well as economically sensitive sectors like energy and financials, may offer potential opportunities. The key to navigating this changing landscape is staying disciplined, sticking to asset allocation strategies, and adapting to market shifts.

DISCLAIMERS The views/opinions expressed herein are solely those of the author(s) and may not necessarily be the views of Global X Investments Canada Inc. All comments, opinions and views expressed are generally based on information available as of the date of publication and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.

It is important to note that valuation measures, while useful, do not necessarily predict a stock's short-term movements. A stock can remain overvalued or undervalued for an extended period without an apparent catalyst. However, valuations hold considerable predictive power over the long term, providing valuable insights into future return expectations. By maintaining a geographically diversified portfolio, investors can ensure they already have exposure to those “cheaper” regions as valuations begin to normalize.

Sector Considerations When interest rates fall, specific sectors tend to benefit more than others. Historically, rate-sensitive sectors such as utilities and consumer staples have performed well in declining rate environments. This outperformance is often due to these sectors' relatively high dividend yields, which become more attractive as bond yields fall. Additionally, lower borrowing costs can enhance profitability for companies in these sectors, making them more appealing to investors.

However, it is not just the rate-sensitive sectors that stand to gain. Economically sensitive sectors like energy and financials can also do well in a rate-cutting environment. For example, lower interest rates often lead to increased consumer spending and business investment, driving demand for energy. Similarly, financials may benefit from a steepening yield curve, which can improve the profitability of lending activities.

This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase investment products (the "Global X Funds") managed by Global X Investments Canada Inc. and is not, and should not be construed as, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. These investments may not be suitable to the circumstances of an investor.

Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. These forwardlooking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.

Global X Investments Canada Inc. (“Global X”) is a wholly-owned subsidiary of Mirae Asset Global Investments Co., Ltd. (“Mirae Asset”), the Korea-based asset management entity of Mirae Asset Financial Group. Global X is a corporation existing under the laws of Canada and is the manager, investment manager and trustee of the Global X Funds. © 2024 Global X Investments Canada Inc. All Rights Reserved.

Core Investment Principles The current shift towards a rate-cutting regime underscores the importance of maintaining a disciplined investment strategy. Despite the temptation to chase trends or make impulsive changes in response to market fluctuations, investors should prioritize sticking to their asset allocation plans. This disciplined approach ensures that portfolios remain balanced, aligned with long-term investment goals, and protected against taking excessive risks.

©

2024 CFA Society Toronto. All rights reserved. The Analyst | December 2024

27

Congratulations to Sara Loriot, CFA! CONGRATULATIONS

CONGRATULATIONS

TO SARA LORIOT, CFA! CFA! We're thrilled toLORIOT, announce that TO SARA Sara Loriot, CFA has beenthat named We're thrilled to announce We're thrilled to announceSara that Sara Loriot, CFA, has been one ofone of one ofLoriot, the five outstanding recipients CFA, has named been named the fivethe outstanding of theof the five outstanding recipients of the Emerging CFArecipients Society Leader Emerging CFA Society Leader Award AwardEmerging 2024. CFA Society Leader Award 2024.

2024.

CONGRATULATIONS

TO SARA LORIOT, CFA! SCAN TO SCAN to TOannounce that Sara We're thrilled Scan to read READ FULL READ FULL Loriot, CFA, has been named one of DETAILS DETAILS full details recipients of the the five outstanding Emerging CFA Society Leader Award 2024.

OUTSTANDING OUTSTANDING Outstanding SOCIETY OF THE YEAR! SOCIETY OF THE YEAR! Society of by the Awarded CFA year!

Institute Awarded

by CFA Institute AwardedCFA

by CFA Institute Society Toronto is to be one of

CFA Society Toronto is to be one of OUTSTANDING only six societies worldwide to receive only six societies worldwide toonly receive CFA Society Toronto is one of theSOCIETY prestigious Outstanding Society of OF THE YEAR! the prestigious Outstanding Society of 160 theAwarded Year award, out of more than six societies worldwide to receive the Institute the Yearglobal award,societies. outby ofCFA more than 160 This recognition prestigious Outstanding Society of the global societies.

This recognition highlights ourToronto unwavering dedication to CFA Society is to be one of highlights our dedication to Year Award, outunwavering ofsocieties more than 160 profession, global advancing the investment only six worldwide to receive advancing the investment profession, the prestigious Outstanding Society cultivating a vibrant and supportive societies.

This recognition highlights our of cultivating a vibrant and supportive the Year award, out of more than 160 community, and driving impactful global societies.

This recognition unwavering dedication toimpactful advancing the community, andin driving change the industry. highlights our unwavering dedication to change in the industry. cultivating a investment profession, advancing the investment profession,

a vibrant and supportive vibrant andcultivating supportive community, and community, and driving impactful driving impactful in the industry. change inTO the industry.

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