Globalization: The Impact on International Investing

Agenda (Updated April 3, 2001)

6th Annual Global Investment Conference

April 18-21, 2001
Chateau Whistler, B.C.

Wednesday, April 18

5:00 - 7:00 Cocktail Reception and Registration (Macdonald Foyer)
Meet your colleagues and register for the conference.

Thursday, April 19

7:00 - 8:30 Breakfast (Wildflower Upper)

8:30 - 8:50 Introduction (Macdonald Ballroom AB)
Canadian Investment Review

8:50-10:00 Globalization: Rioting in the Streets

Speaker: Michael Walker, executive director of the Fraser Institute.
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Factors such as the integration of the world's capital markets and technological change have created tremendous conflict between various parties. Will globalization improve economic growth and the standard of living for everyone, or disregard environmental concerns and advance the interests of multinationals to the detriment of the world's poor? How does this issue matter to pension plan sponsors?

10:00-10:30 Break

10:30-12:00 Session 1: Managing Global Risk

Moderator: Kevin Press

Operational Risk
Presenter: Paul Stillabower, Royal Trust
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Investing in foreign countries means pension funds must pay attention to different risks. Global investing also dramatically increases risk, since different countries may have different practices, tax laws, corporate governance, regulatory practices and political systems.

Currency Risks and Opportunities
Presenter: Richard Meese, Barclays Global Investors
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Should currency be treated as a separate asset class? It is common practice for investors to subordinate currency decisions to a secondary level. This practice may lead to biases in asset allocation. Effective portfolio management requires consideration of international assets on a hedged and unhedged basis, and thus to consider currency as a separate asset class.

The Geography of Investments
Presenter: Joshua D. Coval, School of Business, University of Michigan
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An ongoing debate is whether domestic managers can earn better returns than those who are physically closer to their investments. Is there a risk in not hiring a local manager? A look at the evidence.

Respondents:
Ken Bancroft, Alberta Teachers' Retirement Fund Board
Lynn Clark, Ontario Municipal Employees' Retirement System

12:00-1:30 Lunch (Wildflower Upper)

1:30-3:00 Session 2: Technology in the New World

Moderator: Lori Bak

After the Gold Rush
Presenter: Philip Olsson, Altamira
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Technology didn't crash - some financial assets crashed following a long period of cheap capital and over-investment. Innovation continues, but adoption rates reflect slowing capital investment. Venture capital markets are now more discriminating and more efficient. Canada suddenly finds itself at the global crossroads of technology, creating appealing private equity opportunities for Canadian sponsors.

Accounting Gray Zones
Presenter: Kim Shannon, Merrill Lynch Investment Managers
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Many technology companies around the world use aggressive financial accounting techniques when preparing their financial statements. With many pension funds investing more in this area, what is the actual quality of the financial numbers analysts are using?

Technology and Plan Sponsors
Presenter: Paul Williams, Rogers Media
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Technology and the Internet have changed the way many companies do business, particularly in the global arena. Plan sponsors are looking at the best way to harness new technology to their advantage. The results of a recent study will be presented.

Respondents:
Bruce Grantier, Scotiabank
Colin Gruending, Enbridge Inc.

3:00-3:15 Break

3:15-4:45 Session 3: Beyond Equities: New Global Opportunities

Moderator: Kevin Press

Exploring Global Bonds
Presenter: Mark Watts, Baring Asset Management
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The shortening supply and disproportionate demand for fixed income products is a global phenomenon. Plan sponsors continue to have the same investment objectives, but it will become increasingly difficult to satisfy their asset mix requirements through fixed income. Unique opportunities to be found in the fixed income area include high-yielding corporate bonds denominated in euros and credit or non-sovereign bond investing.

Back to the Future: The Return of Total Return Investing
Presenter: Ed Peters, PanAgora Asset Management
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CAPM not only simplified Markowitz's model, it simplified the process of creating strategic allocations. Because investment strategies became benchmark driven (with index funds as the default investment), strategic allocation could be done using benchmark indices. Hedge Funds have no benchmark, causing headaches for consultants and Financial Engines which depend upon benchmarks to make strategic allocations. Instead, we need to return to full Markowitz covariance in order to determine the impact of a specific hedge fund on the strategic allocation. Hedge funds have returned us to the pre-benchmark age.

Global Hedge Funds
Presenter: Rob Heinkel, University of British Columbia
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We all know about the Long Term Capital Management blowup. What has happened since? What is a hedge fund, how does it work and how have they performed? This presentation will review studies of global hedge funds and provide an overview of the investment vehicle.

Respondents:
Robert Bertram, Ontario Teachers' Pension Plan Board
Pierre Lussier, CDP Global Asset Management

4:45-4:55 Wrap-up: Paul Halpern, University of Toronto

6:15 Cocktails (Macdonald Ballroom C - Foyer)

7:00 Dinner (Macdonald Ballroom C)
Dinner Speaker: Peter Mansbridge

Friday, April 20

7:00 - 8:30 Breakfast (Wildflower Upper)

8:45-10:00 Bullpit Session (Macdonald Ballroom AB)
Your chance to ask difficult questions of a plan sponsor, custodian, or money manager.
Moderators: Kevin Press and Lori Bak

10:00-10:30 Break

10:30-12:00 Session 4: Global Market Dynamics

Moderator: Kevin Press

Do Countries Still Matter?
Presenter: Sandra Yeager, Alliance Capital Management
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The ongoing globalization of world economies and the introduction of the euro have prompted the re-evaluation of the country and sector effects on security returns. Is the country effect dead? New research in this area presents some conclusions on the sector vs. country debate.

Correlations in a Changing World
Presenter: James Clunie, Murray Johnstone International
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Understanding correlations between various market segments gives an investor the tools needed to produce a portfolio with appropriate risk characteristics. Many correlations vary with economic and monetary conditions, and with wholesale investor sentiment. The conclusions from studies of correlations among areas such as US interest rates and global markets will be presented, and whether or not global thematic and sector trends start in the US will be discussed.

International Stock Market Correlations: Economic Fundamentals or Contagion?
Presenter: Andrew Karolyi, Fisher College of Business, Ohio State University
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How important are economic fundamentals such as country, region or sector for forecasting international stock return correlations, compared to contagion effects? A look at a new approach to evaluate contagion effects in financial markets based on extreme returns, and how it is applied.

Repondents:
Mary Spurr, British Columbia Investment Management Corporation
Donald Walcot, Bimcor Inc.

12:00-1:30 Group Photo and Lunch

1:30-3:00 Leading-edge Ideas: Plan Sponsor Panel

Moderator: Lori Bak

Focus on the Process
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Implementing investment strategies requires a well thought out process, not a hit and miss mode of operation. Bob Bertram, senior vice-president, investments of Ontario Teachers' Pension Plan Board, discusses the overall systems his plan has developed to deploy innovative ideas.

Structuring Equity Funds Using the Core/Satellite Approach
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Which is better, passive or active investing? The debate continues. Don Lindsey, President and CEO of the University of Toronto Asset Management gives his views on how to combine passive management with actively managed portfolios, and why a plan sponsor should consider both.

A Brand New Plan
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A new pension plan is formed, with funds coming in at the rate of $200 million a month. Given the myriad available investment choices and opportunities, how do you build a pension plan from the ground up? Adel Sarwat, President and Chief Executive Officer of the Public Sector Pension Investment Board will discuss how PSP Investments is meeting the challenge.

Respondents:
Terri Troy, Royal Bank
Tom Phelps, Noranda Inc.

3:00-3:15 Break

3:15-4:15 Who Wants To Be A Billionaire?
Moderator: John Milne

4:15-4:25 Wrap-up: Paul Halpern, University of Toronto

4:25-4:30 Concluding Remarks

4:30-5:30 Cocktail Reception (Macdonald Foyer)

Saturday, April 21

Ski day