DALIS-Newsletter-November-Edition

Fund Trading
Maritime
Strategy
of the Month:
Trade
Yield Curve
Canadian
Spotlight:
Student
Parker
Jack
Spotlight:
Alumni
Hutcheson
Adrian
N O V E M B E R 2 0 1 8 | I S S U E N O . 1
The Schooner
The month in review
OUR FIRST "SCHOONER"
A GLIMPSE OF
WHAT'S INSIDE:
A Note from the Execs
Hello and welcome to the first edition of the new and
improved Schooner, the Dalhousie Investment Society’s
monthly newsletter. DALIS manages a mock portfolio
called the Maritime Fund, wherein we execute
sophisticated trade strategies involving debt, equity, and
Flatener
derivative instruments across global sectors. In terms of
leadership, our society is comprised of a team of three
executives and ten group heads, two for each asset class,
all with related industry experience. We will publish the
Schooner the first Monday of every month highlighting
what trades we are executing, placing a spotlight on our
most active members, interviewing an alumni and lastly,
Rick's Rant: Why a
seeing what Dr. Rick Nason has to say during his "Rick's
"Paper" Fund?
Rant".

FROM THE EXECS COT'D
NOTE
Thomas will serve as President. Christian has three co-op terms of experience with
Christian
Securities, two with the Money Markets desk and one with Interest Rate Derivatives.
TD
this year, Christian will be returning to TD Securities as a Rotational Associate.
Following
Rutherford will serve as Vice President. Briana also has three co-op terms of
Briana
with TD, two with TD Securities in the Asset Securitization group and on the
experience
Equity Cash Trading desk, followed by a final term with TD Asset Management in
Institutional
Equity Research. After graduation, she will be returning to TD Asset
Fundamental
Haines will serve as Vice President. Griffin has completed four co-op terms with
Griffin
of Canada’s largest banks, first as an Equity Derivative Operations Analyst with RBC
three
Markets, then as an Analyst in the Alternative Solutions Group with CIBC Capital
Capital
next as an Equity Derivatives Analyst with Scotiabank Global Markets, and finally
Markets,
the Rates Trading desk with CIBC Capital markets. Upon graduating, he will be
on
to CIBC Capital Markets as a Rotational Associate.
returning
year, DALIS has several key objectives that we’ve prioritized. First and foremost, our
This
is education. Through both our general meeting and that of their specific asset class,
goal
learn to connect global occurrences with market events, and are taught about a
students
of relevant financial topics. Second, this year DALIS has worked to improve
variety
This year we’ve included MBA students alongside undergraduates, for a truly
inclusivity.
society with a wide scope of perspectives. Lastly, this year DALIS has
all-encompassing
towards increasing our outreach, both within the Dalhousie community and
worked
We have collaborated with other Dalhousie societies under the umbrella of
externally.
increased our social media presence via LinkedIn and Facebook, and are
Commerce,
working to foster further connections through alumni, key speakers, and the
continuously
in all, we could not be more excited about this year and all the opportunity it holds.
All
you for all your continued support, and don’t hesitate to reach out with any
Thank
Management as a Rotational Associate.
Schooner itself.
questions, concerns, or potential opportunities.
All the best from your Exec Team,
Christian, Briana & Griff

MARITIME FUND TRADING STRATEGY OVERVIEW
DALIS
allocation for an evolving world
Asset
Dalhousie Investment Society (DALIS) Maritime Fund is designed to serve as a flexible,
The
asset allocation solution. It seeks to benefit from global opportunities
comprehensive
also limiting downside risks created by today’s evolving and sometimes turbulent
while
marketplace.
Allocation
Forward-looking
Maritime Fund is an “all-in-one” global asset allocation strategy designed to serve as
DALIS
core holding in investor portfolios. The fund uses a globally diversified investment
a
allocating across all liquid asset classes, regions, and sectors. It seeks to deliver
approach,
investment opportunity set and flexibility
Broad
fund invests across the full spectrum of liquid asset classes, including global stocks
The
bonds, currencies, as well as exchange-traded derivatives. The fund has highly flexible
and
guidelines and follows a tactical investment approach to quickly adapt to
investment
market conditions. The fund comprises of five separate asset groups: North
changing
Equities, International Equities, Commodities, Macro, and Risk Management.
American
investment teams
Eager
investment team is comprised two upper-year Group Heads and 12-15 Rowe School
Each
Business students ranging from 1st Year to 2nd Year MBA. These investment teams meet
of
a weekly basis and discuss events that will impact their asset classes in the future
on
and formulate profitable trading ideas. The ability to trade more than vanilla stocks
weeks,
DALIS members the opportunity to apply principles used in the classroom, and
provides
them to real-world trading strategies. This allows DALIS members to further develop
apply
understanding of how volatile marketplaces impact the pricing of various securities.
an
Event Trading
DALIS
to DALIS this year, the fund has created the Macro Trading group in order to take
New
positions going into a variety of market events that generally create volatile
high-risk
activity. The Macro Trading group executes trading positions based off how they
market
global economies are impacting financial markets. Most recently, the Macro
interpret
group went into the October Bank of Canada meeting with two separate
Trading
Government Bond positions and a Currency pair trade as a hedge. This was a
Canadian
market event for the Macro group as they were able to generate over $75k in
successful
attractive risk-adjusted returns and consistent outperformance over its benchmark index.
realized profits for the Fund.

Commentary:
Trade
Macro Trading group was forecasting a flattening of the yield curve with the
The
that we would see a better than estimated MoM CPI print on the Friday as well
expectation
a rate hike from the Bank of Canada the following Wednesday. Upon further analysis, the
as
Trading group executed a duration-weighted trade with the thesis that these
Macro
events would diminish the yield-spread between the 2 year and 30 year
economic
of Canada bonds. A poor CPI print resulted in a steepening of the yield curve
Government
on in the trade, however a stock market sell-off and Bank of Canada rate hike resulted
early
an increased demand for fixed income instruments and a flattening of the yield curve.
in
positive outsome resulted in a profit of $62,750 but most importantly, gave our
This
Duration:
Trade
16th to the 26th,
October
5,537 Government of
Buy:
2.75% Dec 48
Canada
61,520 Government of
Sell:
2% Nov 20 bonds
Canada
Yield Spread:
Starting
BPS 22.31
of Trade:
Outcome
Yield Spread: 15.7
Ending
TRADE OF THE MONTH: CANADIAN YIELD CURVE FLATTENER
members the opportunity to trade a major event.
10 days
Positions:
bonds
Risk:
12,000 in DV01
BPS
Total PnL Earned: $62,570

SPOTLIGHT:
STUDENT
PARKER
JACK
Parker is a second-year finance
Jack
and member of DALIS North
major
Equities. He has held a
American
position at a private equity firm
summer
Calgary as a Business Development
in
For his first co-op work term, he
Assistant.
accepted employment at Park Lawn
has
in Toronto with roles in
Corporation
What is your current/past
Q:
with DALIS?
involvement
I joined DALIS in my first year as a part of
A:
North American Equities Group. My
the
to date has been actively contributing
role
both the larger DALIS meeting as well as
to
group specific meetings. I entered
the
this year knowing that I wanted to
DALIS
an active contributor to not only the
be
meetings but also to the portfolio.
group
goal has lead me to pitch various
This
of which one of my pairs trade was
trades
into the portfolio and performed
entered
well. I hope to be able to
exceptionally
my experience and eagerness to
leverage
on a leadership role in future years.
take
What have you learned during
Q:
time as a DALIS member?
your
has provided me with the link
DALIS
the classroom to the real world.
from
link allows me to tie the concepts I
This
learning in my course work to the real
am
something that was incredibly
world,
during my summer placement
beneficial
Alaris Royalty. Capital markets are
at
very complex and DALIS has
obviously
the theory I am learning
complemented
This combination has allowed
perfectly.
to begin to develop an understanding
me
what drives markets but has also
of
me to start forming my own
allowed
Another major part of DALIS
opinions.
I value is the open environment.
that
markets are shrouded in jargon
Capital
being able to ask questions about
and
various terms mean in an open
what
means that I can enter the
setting
more informed but also more
workforce
honest answer is that I have no idea.
The
want to keep as many doors open as
I
and take a stab at a few different
possible
before I settle in. That being
industries
as I learn more about capital
said,
it is looking like a natural fit.
markets
markets are complex, dynamic
Capital
fast paced, all components I am
and
for in a career. I have a lot to look
looking
to and hope to discover more
forward
paths through my three upcoming
career
placements.
co-op
finance and accounting.
confident.
Q: Where do you want to see yourself
in 5 years?

SPOTLIGHT:
ALUMNI
HUTCHESON
ADRIAN
was born and raised in the
Adrian
in Toronto where he attended
Beaches
Collegiate before deciding to
Malvern
Dalhousie in 2013. After gaining
attend
in Fixed Income Sales and
experience
Origination through his three
Derivative
and experience rotating, Adrian
co-ops
to begin his career on the
decided
Money Market desk at TD
Institutional
During his free time Adrian
Securities.
be found skiing, playing basketball
can
being hopelessly optimistic about
and
joined DALIS in my first year as a general
I
with a goal of learning as much
member,
possible about the various areas of
as
markets. In my second year I was
capital
Group Head for the Commodities
the
which was definitely not due to my
group
experience but rather my interest
previous
initiative. In my third year I was
and
as VP where I was responsible for
elected
the weekly meetings and
organizing
an eye on the portfolio. In my last
keeping
I was the President, supervising the
year
while trying to develop DALIS’
portfolio
presence.
external
do you feel DALIS assisted you
How
your time at Dalhousie?
during
was the perfect place to develop
DALIS
presentation skills as well as my
my
thinking. I learned how to
critical
the news in the context of
interpret
a trade, and also how to pitch
making
idea to other members of the group.
that
the ability to pitch and critique
Having
trades absolutely helped me
potential
my interviews as well as once I hit
during
workplace. Being able to memorize
the
from a textbook lays a solid
information
but developing a trade thesis,
foundation
it to a group and
presenting
getting critiqued is
subsequently
that a textbook cannot teach
something
It was this component, that for me,
you.
you have any advice for current
If
members what would it be?
DALIS
biggest advice to current DALIS
My
is to speak up, voice what you
members
and work for it. If you really want
want
then communicate it to the
something,
DALIS members, keep your grades
senior
and most importantly - have an opinion.
up
that interviewers often talk to
Remember
of students every week, by
hundreds
an opinion on a trade/macro event
having
become more interesting and
you
what you want and working for it
Voicing
a framework exclusive to securing a
isn’t
in capital markets but is important in
job
remainder of your degree as well as
the
you hit the workforce, wherever
when
may be.
that
was incredibly valuable.
the Maple Leaf’s chances.
Q: What was your past involvement
with DALIS?
differentiate yourself from the larger group.

RANT
RICK'S
a "Paper" Fund?
Why
I describe to people what DALIS is, the first question I always get is “Why structure it as a
When
fund?” The first, and obvious response, is that we do not have the resources to operate a
“paper”
money fund. However, this knee-jerk response is cutting short the real reasons (plural) that
“real”
is not a “real” money fund.
DALIS
is a vehicle for students to learn about financial markets, and secondarily to prepare them
DALIS
careers in the financial industry. As students in a competitive top tier school, they rightly
for
to have the institution prepare them with the latest ideas and for competitive top-tier
expect
Furthermore, they rightly expect to be prepared to handle the demands of the future,
careers.
than the past. Operating DALIS as a “paper” hedge fund, is the only way to prepare
rather
for the complexities of the financial industry both for today and for the expectations for
students
“real” money investment clubs can basically do one investment activity – buy North
Traditional
equity securities. Additionally, most funds are restricted, (through the limitations put
American
them by their donors), to trading in stocks in the major indices such as the Dow Jones Index,
on
the S&P / TSX index. This is not very exciting, nor is it preparing students for the full range of
of
a “paper” fund, the universe of assets that DALIS can invest in is limited only by the realities
With
the market. Besides traditional North American equity investments, DALIS can, and does,
of
in global equities, fixed income assets, currencies, commodities, structured products, and
invest
assets such as cryptocurrencies. The fund can go long or short any of these assets.
alternative
a “paper” fund, members of DALIS learn the fundamentals of record keeping and return
With
– all functions that traditional student funds never learn as the mechanics of trades
calculation
generally done by their brokers. DALIS has students engaged in risk management and
are
strategies. Additionally very few other student funds have students specializing in cash
overlay
participants in a “real” money fund are not only limited in their allowable investments,
Student
also in their risk appetite. Dealing with “real” money involves a fiduciary responsibility (which
but
is a valuable aspect to learn in its own right) that limits the ability to take risk, and
admittedly
to learn about risk. DALIS participants can undertake somewhat unorthodox, and risky
thus
(albeit after a rigorous “beat-up” by a series of peer evaluations) that allow students to
ideas,
and understand risk by doing and following the results of their actions in real time.
appreciate
the biggest advantage of DALIS comes from the complexities of the breadth of assets
Perhaps
investment strategies that DALIS employs. The learning curve for student participants in
and
is very steep and very intimidating. The learning curve for this completely student
DALIS
fund necessitates that DALIS produce student leaders who know how to manage,
managed
coach and mentor others. The student leaders of DALIS have developed a robust
organize,
structure that both encourages and develops leadership skills in students.
managerial
financial products and ideas will develop and evolve, but the lessons of
Ultimately
a steep learning curve, learning to take risks and recover from mistakes, and
tackling
leadership ability are skills that will prove of more long-term value than any “real”
testing
can buy.
money
Rick Nason, PhD, CFA
the future.
financial careers.
Furthermore, the fund employs derivative strategies.
management.