Hedge fund course gathers steam

(September 21, 2004) Jules Lalonde realized he needed to get up to speed on hedge funds when a client approached the Sudbury, Ont.-based advisor about adding the product to his portfolio. After doing some research on a topic he concedes he knew little about and had dismissed as a fad, Lalonde found out about the Certified Hedge Fund Specialist Course.

The 10-week course is offered twice a year by The Strategy Institute and the Canadian Chapter of the International Hedge Fund Association. The participants are mostly advisors who, like Lalonde, want to be able to offer their clients more astute advice on alternative investment strategies. Broken into five sessions, or modules, the course is taught in a classroom setting in Toronto, by instructors who themselves are managers or professionals in the advice industry.

The first module begins with the basics, covering the key roles of the different players and the history of hedge funds, with an emphasis on those that didn’t fare so well and virtually blew up to become historic media fodder — the Long Term Capitals and Beacon Hills. The second module covers individual hedge fund strategies such as convertible arbitrage, fixed income arbitrage and market neutral. The course wraps up with a focus on marketing, regulation and portfolio construction.

Once students have completed the course, they write an intensive six-hour exam that will determine whether they receive the Certified Hedge Fund Specialist (CHFS) designation.

This fall will mark the third time round as an instructor for Darren Coleman, investment advisor at TD Waterhouse, who took the course the first time it was offered in spring 2003. By September, Coleman was teaching it. “[The Strategy Institute] approached me. The rationale was that they thought the portfolio construction module would be very effective if it was taught by an advisor rather than a hedge fund manager,” he says.

Although the classroom setting is a unique selling feature, it’s not easily accessible for advisors like Lalonde, who had to commute to Toronto on a weekly basis to attend the full-day training sessions. However, Coleman says the Strategy Institute is currently looking at new options to be able to offer the course beyond the Greater Toronto Area.

“The course is being implemented into a distance learning function and whether that will be Web-based or whatever, that’s in the works,” Coleman says. “So the plan is to be able to offer it across Canada so advisors who can’t make it to Toronto can make it to the computer to be able to do the course.”

Lalonde, who took the course and passed the exam, says he’s thrilled with the changes he’s seen in his own philosophy of the funds and in the savvier solutions he can now offer his clients. “Hedge funds are not used as a product to add yield or add return to the investment plan, but rather used as a very important diversifier and risk mitigation tool,” he says.

The Strategy Institute’s next hedge fund course starts September 24.

Heidi Staseson is Assistant Editor at Advisor’s Edge

(09/21/04)