Newsletter - August 2009

Director's Comments:

Infrastructure Investing - bringing a proven model to the US

Dear Colleagues,

As we all know, the key to being a successful investment practitioner is an ability to roll with the punches. Though we use historical data to build models, we all understand that the great opportunities come when we look forward, not back. But rarely in the last several decades have we encountered the deep, systemic changes we face today. And so unearthing the opportunities found in such change will require great flexibility, creativity, and a lot of rolling with those punches.

Take, for example, infrastructure investing. To date, the US has lagged well behind much of the rest of the world in this sector. The US model was highly reliant on government funding via municipal bonds, which meant that investor’s access to infrastructure was almost entirely indirect.

Today, the US government, facing mounting deficits, an acute need to invest in its infrastructure, and an administration with a demonstrated interest in exploring new solutions to old problems, is perfectly positioned to explore an investment model that brings in the private sector.

What would this partnership mean for the private sector? Infrastructure is often an ideal investment for institutional investors, with their long time horizons and quest for stable non-correlated return streams. In return, private investors can ease the immediate strain currently felt in government coffers.

Governments at the federal, state, and municipal levels will find private investors bring with them more benefits than just the funds themselves. Private investors generally have greater expertise in bringing proper management and oversight to such initiatives, which can cut down on the “pork barrel” aspect of some government-led projects. For those familiar with our area of the world, Boston’s “Big Dig” is a lesson that needs no repeating!

In order for a private-public infrastructure partnership to succeed, investors and government officials need to come together in a meaningful way. Officials need to provide investors with real insight into the community in which they’re investing. They need to promote the initiative within their community to bring citizen support to the program. And in turn investors need to demonstrate a commitment not just to the asset in which they’re investing, but also the community that will benefit, or suffer, based on the success of the project.

Here at the CAIA Association, we’re moving fast, but deliberately, to keep our candidates and members up to date as the investment world realigns to match this shifting economic landscape.

In the coming months we will be introducing a new curriculum and launching a new website with increased functionality and an interface we know you will enjoy. As always, we look forward to your input and feedback as we adapt to meet the expectations of our changing investment world.

Best regards,
Craig Asche
Executive Director

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Exam Updates

September 2009 Registration is Now Closed

Exam Appointment Scheduling: CAIA candidates who have not yet scheduled an exam appointment are encouraged to do so as soon as possible. All exams are scheduled directly through Pearson VUE. If you encounter any scheduling difficulties, please contact Pearson VUE immediately.

REMINDER -- CALCULATOR POLICY:
Only the TI BA II Plus (as well as the Professional model) or the HP 12C (as well as the Platinum edition) are allowed during the CAIA exams. No other calculators are allowed in the testing room. There are no exceptions to this policy. As in the past, exam proctors will require that all calculator memory be cleared prior to the start of the exam.

Formulas and Equations:
All formulas listed in the Study Guide, in the exact form as they appear in the Study Guide, will be available as an exhibit (i.e. a pop-up window) during the exam.

Identification Requirements: You will not be allowed into the testing room without the proper identification. Please review the ID policy here.

March 2010 Exam Registration

Registration for the next exam period (tentative dates: March 04 – 19, 2010) opens October 5, 2009

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Alternative Viewpoints... powered by CAIA

"When it comes to transparency, institutional investors are being treated as "second class citizens"

posted July 23 on AllAboutAlpha.com

Steve Deutsch, CFA, CAIA, Director of Separate Accounts/Collective Investment Trusts and the Pensions, Endowments, and Foundations Database, Morningstar, Inc. writes that despite all the talk of "transparency", the micro-economics of the institutional investment industry often prevent the message from getting through.

As we continue to experience an economic and financial correction, all sorts of remedies have been prescribed. Most recently, the Investors' Working Group, composed of the Council of Institutional Investors and the CFA Institute, have made several recommendations. And no less an authority than the Pope himself has weighed in on the subject in his June 29th, 2009 Encyclical Letter, which the Financial Times summarized as a condemnation of capitalism's failures and a call for stronger government regulation.

A standard elixir during financial calamities, in years past and right now, is always "transparency". But what exactly does this mean for institutional investors?

"Shenanigans"

While the world may be "flat" when it comes to global trade (see Thomas Friedman's "The World is Flat: A Brief History of the Twenty-first Century"), the world is still as round as ever for financial markets (as proposed by author David Smick in "The World is Curved: Hidden Dangers to the Global Economy")

Click here to continue...

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$10,000 AIMA Canada - Hillsdale Research Award 2009

Submit by September 30, 2009

The deadline is fast approaching to make your submission to the fifth annual $10,000 AIMA Canada – Hillsdale Research Award 2009.

The award sponsors welcome all contributions and would like to count you amongst the winners. In addition to a cash prize of $10,000, the award includes a guaranteed publication of the summary version of the winning paper in the prestigious Canadian Investment Review.

The winner must reside in Canada or is a Canadian who is living abroad. The research can pertain to any aspect of alternative investments such as, but not limited to investment strategy, portfolio construction, regulation, governance, trading, risk management, risk measurement and manager selection.

All submissions are treated in the strictest confidence and only the winning author(s) is(are) made public.

For further details, the rules for submission and an online application please visit www.aima-canada.org, under Research Award.

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CAIA Chapter Notes

After several months of intense activity, August is a welcome period of planning and re-energizing for the fall.

SINGAPORE:

CAIA Singapore hosted a member-only educational lunch event entitled "Socially Responsible Investment" on Thursday, August 6th at the HSBC Auditorium.

On July 8th, CAIA Singapore hosted another educational event on "Climate Change and Renewable Energy: Why China is developing renewable energy?." Click here to view past event details.

NEW YORK:

On October 14th CAIA New York, in conjunction with the New York Society of Security Analysts (NYSSA) and the Connecticut Hedge Fund Association, is organizing a Green Investing Symposium. The event will take place at the Bloomberg Building from 2 to 6pm, with a reception to follow. Details are forthcoming.

LONDON:

CAIA London is holding a social for August 17th at the Counting House. This event is open to members and current candidates. Please click here to view details and to register.

Last month, members in London gathered for a social event on July 22nd at Mulligan's of Mayfair, continuing a tradition of monthly socials that CAIA London began three years ago!

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Job Board Highlights

Firms searching for highly qualified, alternatives-focused personnel are turning to the CAIA Job Board to fill top positions in their firms. Below are two recent postings available to CAIA members:

A Boutique Multi-Family Office based in mid-town Manhattan seeks Open-Architecture Investment Manager Research Analyst to (1) manage third-party traditional and alternative investment manager research process, (2) write manager research reports & quarterly newsletters, (3) provide input to Investment Policy Committee on global economic and markets research & (4) interact with UHNW client base regarding manager-related situations.

A Registered Investment Advisor (RIA) in Boston, Massachusetts is looking for Senior VP, Head of Institutional Sales for an entire new business development effort. Responsibilities include client prospecting, making presentations, and selling at the decision-maker level. Working with a marketing assistant, the Head of Institutional Sales will create, develop and maintain the pipeline for prospective new clients. Prospects include defined benefit plans, endowments and foundations, HNW/ family offices and the consultants for these sponsors.

Recruiters and employers interested in posting a position on the CAIA Job Board, please contact Member Services at member@caia.org.

CAIA members interested in these openings or other postings, please visit the Job Board.

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