A research paper that concludes that Canadian hedge funds generally outperform their global peers has been awarded the 2009 AIMA Canada – Hillsdale Research Award and a cash prize of $10,000.

The paper was produced by three individuals from Vancouver-based alternative investment firm KCS Fund Strategies Inc.: Peter Klein, advising principal; Isaac Schweigert, portfolio manager; and Daryl Purdy, business development and consulting.

Their winning paper, entitled “The Great White North,” analyzes the risk/return characteristics of the Canadian versus global hedge fund industries, based on an analysis of approximately 200 active and inactive Canadian hedge funds between 2005 and 2009.

Their research concludes that Canadian hedge funds generally outperformed their global peers on a number of dimensions, including their nimbleness provided by their smaller asset size, the efficiency of Canadian markets and a local information advantage. It determines that the returns of Canadian hedge funds have generally been higher than those from global hedge funds, with only slightly higher risk.

The Alternative Investment Management Association – Canada Inc. partners with independent investment firm Hillsdale Investment Management Inc. to provide the AIMA Canada – Hillsdale Research Award, which was initially established in 2004. It is intended to encourage and recognize high quality applied research in the field of alternative investments in Canada, and features submissions from academics, students and practitioners who are either Canadian residents or Canadian citizens living abroad.

Eligible papers focus on any aspect of absolute return strategies and their application in hedge funds, managed futures funds, option arbitrage funds and currency funds.

The winning submission was selected from a record number of entries. Judging the entries was an independent panel of academic faculty from business schools across Canada, chaired by Paul Bates, dean of the DeGroote School of Business at McMaster University.

“The paper submitted by Messrs. Klein, Schweigert and Purdy provides valuable and timely insight into the unique strength and potential of the Canadian hedge fund industry,” said Hillsdale president and CEO Chris Guthrie. “As such, it represents an important contribution to the quality of discussion on alternative investments in this country.”

Guthrie said he expects the award to promote a stronger understanding of the alternative investment industry.

IE