Opportunities Funds Commentary

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UPDATE
Trident Investment Management, LLC
Opportunities Funds Commentary
July 31, 2012
Performance Discussion
July was an extremely confusing month globally. Most equity markets rallied with the S&P500 up 1.2%
and the MSCI Europe Index up 4.1%. The Nikkei bucked the trend being down 3.5%. Commodities
were up with gold up 1.1% to end at $1,614.3 an ounce, and oil up 3.7% to end at $88.06 a barrel.
Credit tightened marginally on the month as well. Yet, with this decidedly risk-on tone in markets, bonds
rallied globally with yields on the 10-year U.S. Treasury declining 0.18% to end at 1.47%. The U.S. dollar
strengthened with the U.S. dollar Index appreciating 1.2% on the month (all figures in U.S. dollars).
Most of our funds’ major investment themes worked in July. Our fixed-income long positions, especially
in South Korea and Norway, were the primary contributors to our performance. Our credit book which is
long sovereign credit and short even more corporate credit to ensure a net short bias, also performed with
sovereign spreads in core Europe declining even as corporate spreads stayed largely static. Our gold and
equity positions helped our performance, albeit marginally.
We have not altered our views over the month, and have made only minor tactical changes to the portfolio.
Our long position in fixed income has increased primarily because many of our call options have now
moved into the money with correspondingly higher exposure. We have used the rally to trim some of
this increased risk, especially in some of the bond markets where we see limited upside. We have been
opportunistically adding to our gold holdings. Reality has re-asserted itself in the markets, but participants
still have hopes of central banks riding to the rescue. We expect things to get much more interesting,
and hopefully profitable, in the next few months as markets begin to appreciate just how limited a set of
choices policymakers have.
Market Outlook and Strategy2011 Review
The stream of weak economic news continued over June and July, with most major countries reporting
conditions that were generally much weaker than the already low expectations. The European Union’s
(EU) decline intensified as the German economy, the region’s most vibrant, slowed significantly. China,
Japan and most of Asia also reported weak data, and much of Latin America slowed. The majority of U.S.
indicators suggested an economy that was at stall speed.
The global weakness, in the context of record levels of government debt in the developed world, has
indubitably made the resolution of the world’s problems much more difficult. Any explicit measures to
reduce sovereign debt will lead to weaker growth, and potentially a negative feedback loop where the weak
growth could beget even more debt. Yet, taking on more debt to keep the world in its current somnolent
growth state is becoming increasingly difficult given the already heroic levels of debt in the developed
world.
Given these two unpalatable choices, global policymakers have diverged sharply in their approaches. U.S.
decision-makers have increasingly resorted to the approach of huge fiscal stimulus coupled with outright
monetization of debt through the Federal Reserve to keep any prospect of austerity at bay. The U.S.’ high
fiscal deficit (currently about 8.2% of GDP) and trade deficit (about 3.8% of GDP) coupled with the Fed’s
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UPDATE
stated desire to monetize to prevent “deflation” render the country vulnerable to a currency crisis. After all,
a fiat currency in potentially infinite supply does not provide a particularly good store of value especially
with 10-year real yields in the currency at -0.55% (as valued by the Treasury Inflation Protected Securities
market). However, the U.S. dollar has been granted a reprieve due to market concerns regarding the Euro,
the world’s other major currency.
The austerity measures for the European Union, which have been championed by the creditor nations of
Northen Europe have served to depress already-weak EU growth further. As a precondition for aid from
the better positioned countries, the weaker EU nations have been forced to make deep and painful budget
cuts. These measures have created virtual depressions in these countries which, in turn, have generated
significant political strains in their governments increasing political uncertainty. Some of the weaker EU
nations are struggling now with the need to continue with their austerity in the face of strong political
opposition: conditions that make them question their very membership in the Euro currency zone. There
is considerable uncertainty thus, as to whether some of the weaker EU nations will in fact remain in
the Euro bloc. Not surprisingly, this has led to a standstill in cross-border capital flows with outright
capital flight from some of the weakest nations. Far from being a union of like nations, the EU has now
degenerated into a loose union of solvent core states, along with a few troubled countries whose future
membership in the bloc is questionable. The only unifying glue, at least so far, has been the common
currency which is being supported by radical action from the European Central Bank (ECB).
The so-called TARGET2 loans (which we discussed at length in an earlier communication) from the ECB
to the problem nations in Europe amount to almost €800 billion. These loans are automatically advanced
by the ECB at its discount rates of under 1% to finance capital flight from the problem nations and also
fund their large trade deficits with the stronger EU countries. Most of these TARGET2 receivables are
in turn payable by the ECB to the Bundesbank of Germany, which has been the primary recipient of
flight capital. As such, the Germans have been forced by the EU rules to become reluctant lenders to the
periphery at rates much lower than market levels.
The TARGET2 balances of the ECB do not represent the full exposure of the ECB to the problem
countries. The central bank has additional exposure to the crisis nations because of its open market
purchases of their bonds as part of its Securities Markets Program (SMP.) It also has significant indirect
exposure to them because it has accepted their questionable bonds as collateral against loans made to EU
area financial institutions under its Long Term Repurchase Operation (LTRO) program.
All in all, the ECB has perhaps outdone the Federal Reserve in terms of lending support to the EU
sovereigns. The only (arguably) substantive difference is that the ECB has moved to support the sovereign
credit of the weaker members of the EU periphery without explicit, unsterilized monetization of EU debt
which is against the institution’s charter.
Despite the ECB’s huge intervention to support risky EU borrowers and their failure to stem the current
EU crisis, most observers clamor for even more action. Many policymakers are urging that the newly
created Euro emergency facilities such as the European Financial Stability Facility (EFSF) and the stillto-be-set-up European Stability Mechanism (ESM) be given banking licenses. With such powers, these
structures can leverage their already significant firepower using the ECB’s capabilities for money creation
and move to monetize the debt of the EU periphery. The end result of course would be a de facto ECB
debt monetization, with the EFSF/ESM providing the all-too-transparent cover for such action. The
Germans, to their credit, have strenuously objected to such end-runs around the Maastricht treaty.
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Yet, with a growing number of EU nations under economic stress, many of their policymakers are
considering banding together to outvote the Germans (and the other solvent EU creditor nations) in the
various EU councils to make such ECB monetization possible. Wall Street, the markets, and the media
have all enthusiastically endorsed unlimited ECB bailouts. Not surprisingly, the pressure has begun to
tell. The chairman of the ECB, Mario Draghi, recently made a host of empty promises to do whatever
was needed to support the Euro. He was unable to follow through on these vague statements in the last
scheduled ECB meeting, which proved to be a complete non-event. Such is the communal euphoria
that rumors abound of a new master plan for the crisis with unlimited ECB monetization support for the
same. Treaties, the law, fairness and transparency all seem to take a back seat these days when bailouts are
discussed. It seems that even the most egregiously incompetent of investors cannot be allowed to suffer the
consequences of their bad decisions: instead, the innocent taxpayers should be made to pay.
The concept of monetization slowly appears to be taking hold even in Japan. The country’s sovereign fiscal
situation has deteriorated to critically bad levels, although its overall level of public and private debt as a
percentage of GDP still puts it below the most problematic countries. In fact, the most indebted nation
today seems to be the UK whose total debt tops out at over 1,000% of GDP! Japan is attempting to take some
half steps to reducing its current debt and deficit levels by boosting its consumption taxes over the next two
years – a move that is somewhat symbolic because this increase is predicated on achieving a desired positive
level of growth which currently seems unattainable. Even with such lip service to deficit reduction, the
Japanese Diet has become willing to consider more aggressive monetary intervention. A number of Diet
members have threatened to change the law that guarantees the Bank of Japan’s (BOJ) independence and
to force the institution to adapt its monetary policy to the government’s requirements. While the BOJ has
managed to fight off such challenges in the past, the price it has paid has been an increased willingness to
consider more radical policy. Two dovish policymakers have recently been appointed to the Board of the
BOJ. The current governor will also retire early next year, and his replacement is likely to be someone who
will look favorably on aggressive monetization.
The simple fact is that the U.S. view of monetization of debt has become the preferred alternative for
virtually all policymakers globally, especially in the developed world. The mainstream economic narrative
is that monetization will lead to strong growth which in turn will allow the highly indebted developed
countries to reduce their deficits and debt and return to fiscal nirvana. The alternative of austerity with the
attendant economic pain is simply not discussed seriously – attempting it politically, especially in the U.S.,
would be tantamount to career suicide.
The global proliferation of monetary jingoists warrants a more careful examination of their ideas. Can
radical monetary policy, such as debt monetization and Quantitative Easing (QE), if applied on a global
scale generate strong growth and permit a righting of the imbalances facing the world economy? Can we
construct any Goldilocks scenario where such policies can generate such a result with minimal or no pain?
And can one reasonably invest based on such a set of outcomes? These are the questions to which we turn
our attention below.
1.Defining Unconventional Monetary Policy
A central bank typically conducts monetary policy with a variety of tools in its arsenal. It can set short-term
borrowing rates (known variously as discount or repo rates) to specific levels or within certain bands. It
can also fine-tune rates along the yield curve with so-called open-market operations where it purchases
and sells liquid sovereign bonds to either inject or remove high-powered money as it deems necessary.
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When monetary policy is conducted along conventional lines, the central bank does not significantly alter
its balance sheet except to adjust for longer-term trends in the economy, population, and cash preferences.
Many pure monetarist economists have, in fact, argued that the central bank should simply set a rule for
money supply growth based on some overall economic variables, and refrain from any other action. The
Keynesian school would argue for more active monetary policy to smooth out economic fluctuations, but
would likely concede that in a conventional setting such policy does not imply a dramatic and sustained
increase in the central bank’s balance sheet.
Sometimes economic circumstances may force a central bank to work towards a set of objectives that are
qualitatively well outside its regular mandate. To achieve these objectives, the institution might have to
resort to extremely aggressive use of its monetary tools, or alternatively invent new measures altogether to
allow it to affect the economy. In more extreme cases, the institutional make-up of the central bank itself may
be transformed – it might essentially become a financial intermediary in its own right and disintermediate
its own banks. When a central bank takes such action, we can think of it as engaging in unconventional
monetary policy.
The unconventional monetary measures that have been adopted of late fall into three categories based on
objective:
1)Target the Quantity of High-Powered Money. With this objective, the central bank attempts to achieve a
certain level of growth in the stock of high-powered money. The U.S.’ QE would fall into this category.
2)Fix Longer-term Interest Rates. Most central banks already set short-term discount rates remaining
prepared to lend without limit at those rates. The radical version of such a policy would be to target
the rates for longer maturity bonds and/or non-sovereign paper. Thus a commitment to fix 10-year rates
at 2% or below would mean a requirement to purchase an unlimited amount of 10-year paper if they
yielded over 2%.
3)Affect the Total Stock of Credit. If the country’s banking system is unable to extend credit at acceptable
rates, the central bank might take on that role, or alternatively, change the institutional arrangements
for the banks to ensure that they create a desired level of credit. Thus, incentives for making loans,
reserve requirements, interest rates on reserves, credit guarantees, and the like are all ways of promoting
credit growth.
Each of the above measures can be viewed to some degree as forming a part of conventional monetary
policy. They become unconventional when their implementation requires a significant commitment of
resources from the central bank either in the form of balance sheet or off-balance sheet liabilities. In fact,
a working definition for unconventional policy would be a measurement of the growth rate of the central
bank’s balance sheet. When it far exceeds standard metrics such as the GDP growth rate something unusual
is almost certainly at work.
2. The Effects of Unconventional Monetary Policy
Monetary policy affects growth primarily through three channels:
a)Easier availability of high powered money and/or credit which will mean lower interest rates to
borrowers. This should spur investment as the lower costs of money prompt the exploitation of lowerreturn investments.
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b)An increase in asset prices. The reduction in rates, and particularly longer-term rates, will mean that
any asset’s future cash flows will be discounted back at a lower rate resulting in a higher present value.
UPDATE
c)A weaker trade-weighted exchange rate. With increased credit and lower rates, there is arguably less
support for the currency. If the exchange rate depreciates, this will improve the country’s terms of trade
and boost net exports, and thus growth. This channel is not relevant when looking at the world as a whole
because its net exports have to be zero – any country’s exports are some other’s imports and vice versa.
When unconventional measures are involved, the effects above are exaggerated resulting in a significant
shift in economic conditions over the medium term. These are akin to those produced by central planning.
Consider a model of the world economy with capital and labor being the primary inputs to production.
This economy is closed (without trade) because net trade in the world is zero. New capital for production
in our economy comes from savings which represent the willingness of the members to postpone current
consumption for future consumption – the reward for such a deferral is the interest rate earned on the
savings. Labor in our economy (with assumptions of competition) earns a wage that is equal to the value
added in production by the marginal worker (typically referred to as the marginal revenue product). Let us
also assume that there exists a central bank in our world which facilitates all of the coordination between
the various economic agents using some monetary unit.
In our system, if more capital is used in production, more output will be generated by the marginal worker
and wages will go up, but to obtain more capital, savers need to be provided higher returns too. With
enough assumption and mathematics one can show that in equilibrium all participants end up maximizing
their welfare, with no one wanting to change their behavior. The main insight from our rudimentary model
is that in long-term equilibrium, it is the preferences of savers, the productivity of labor and the nature of the
investment opportunities that determine the level of interest rates. The existence of a monetary authority
which conducts conventional monetary policy to serve as facilitator does not alter the equilibrium.
Unconventional monetary policy in our context would occur if our central bank decided to change its role
from being just a facilitator. If, for example, our central bank instituted measures to force down the longterm cost of capital, its action will reduce savings and prompt more consumption. At the same time, the
marginal cost of capital will be lower than its marginal return in productive activity in some or all industries
and so there will be a net increase in investment. Workers in industries which see investment inflows will
see higher levels of marginal productivity due to increased capital intensity and might benefit from higher
wages. Unfortunately, the reduction in the private supply of capital and the increase in private demand
create a capital shortfall that has to be met entirely by our monetary authority. As such, the central bank
will see an explosion in its liabilities with the increase being larger the lower it sets the cost of capital. Also,
the longer it continues such a policy, the greater will be the expansion in its balance sheet.
The central bank by repricing risk with its policies is engendering an outcome that society does not want.
Savers in our world are being forced to consume more because of rates that are too low, and firms are
investing more than they should given the preferences of savers. Thus, we have both over-consumption and
over-investment, with the bill to be paid ultimately by society when the central bank’s liabilities have to be
dealt with. It is in this fundamental respect that unconventional monetary policy is like central planning.
It is attempting to generate outcomes that society would not be willing to pay for left to its own devices. In
pure economic terms, this is always inefficient.
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Unconventional monetary policies have serious distributional effects. Our simplistic analysis suggests that
a forced decrease in capital costs gives rise to very different effects for various economic agents:
Holders of assets that have largely stable income streams (bond holders) profit.
UPDATE
-
-Stockholders and/or workers in industries where the returns to new capital investments are high benefit
from potentially rising wages and/or profits.
-Savers who rely on future interest rates (bank account savers) or who will deploy new capital (think
pension funds, insurance companies) lose. Their future returns have declined.
Even if the above redistribution is deemed desirable by the authorities, there is a future cost in the form of
the central bank’s liabilities. When these liabilities come due, there is another round of redistribution that
will occur when the various agents in our economy are called on to pay either through inflation or default.
In purely theoretical terms, unconventional monetary policy is central planning at its worst creating huge
economic inefficiencies and distributional effects. Most economic agents however, do not fully understand
what is going on when these measures are at work which means that they can be implemented with little
public protest. It is hard to understand thus, why markets seem to rejoice at the prospect of such policies.
3. Unconventional Measures in Today’s World
When we extend our theoretical analysis to the real world, our conclusions are more disturbing.
Unconventional monetary policy, in fact, might work against most of the outcomes desired by policymakers
even if they prove a short-term palliative for markets. Let us consider some of the issues raised in applying
our analysis to the world as it stands today.
3.1 Asset Prices and Solvency
Unconventional monetary policies boost values of assets with stable income streams. As such, any solvent
country’s bond markets must do well in the face of a record decline in future investment returns engineered
by such policy. A country that does not see a decline in rates, and actually faces an increase, is facing
questions of solvency. The critical focus should first be to address the reasons for potential insolvency.
Purchasing the bonds of countries with solvency issues represents mal-investment at its finest – what do
policymakers know that markets do not?
We would argue that Greece, Portugal, and Ireland (assuming it continues to guarantee its bank debt) are
all insolvent. Spain will not remain solvent unless it embarks on significant political and structural change,
neither of which appears to be forthcoming. Italy may not be in as dire a situation currently, but it is faced
with an aging population, declining growth rate, crushing sovereign debt and an ineffective government.
The markets’ concerns about both Italy and Spain are thus entirely justified and buying their debt will not
change the fundamentals nor will it restore growth.
The U.S. is worthy of a chapter all to itself when it comes to economic problems. We have a higher debt to
GDP ratio than the EU, a fiscal deficit that is over twice as large as that in the EU not to mention a trade
deficit that shows no signs of getting smaller. In addition, we have a political system that is incapable of
making the hard choices needed to generate sustainable growth and stable finances. If the U.S. does not
change its policy course relatively soon, it is firmly on the path to insolvency.
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3.2 The Focus of Incremental Investment
UPDATE
To the extent that unconventional policies increase investment in areas where the risk-adjusted marginal
return is highest, the question that needs to be asked is just where are these areas? If the EU were to engage
in such policy, would there be an investment boom in Spain or Italy? Or are wages and the business
climate in these countries so uncompetitive that incremental capital would be deployed most profitably
in more stable and productive countries such as Germany? Turning to the U.S., if the Fed continues its
QE and China kept its exchange rate undervalued and pegged to the U.S. dollar, would China remain
a better marginal investment destination relative to the U.S.? How about Canada, Australia, Brazil or
other resource countries? Are the growth industries that can best use incremental capital located in the
developing world today or in the EU and the U.S.? If capital were deployed largely in the developing
world, what is the benefit to the developed world at all in terms of job creation?
Our views on this are rather clear. Most countries outside core Europe are hopelessly uncompetitive
as measured by their trade statistics. On a productivity adjusted basis, the German worker is underpaid
relative to his Italian or Spanish counterpart. Moreover, Germany does not have the same political risk
with austerity that both Italy and Spain face today. Even with substantial aid from the EU, it is not clear
that conditions in Italy and Spain are going to be ripe for new investment. The leaders of the EU core
are completely correct in demanding structural reform in the periphery before any discussion of more
unconventional monetary help – without such change, any support will end up worsening the problem.
The U.S. situation is equally dire. The Fed’s continued QE has led to a global investment boom that
has resulted in significant excess capacity. Unfortunately, most of that investment continues to occur in
countries like China. In fact, U.S. firms are among the most aggressive in shedding domestic, high-cost
labor and relocating production to lower wage and more tax friendly countries. More QE will mean more
commodity inflation and ultimately a greater loss of U.S. jobs. It is perhaps the quickest way to transform
the U.S. into a so-called banana republic.
3.3 Distributional Effects
When we look at the potential winners and losers from higher asset prices that might result from
unconventional monetary policies, the results are eye-opening to say the least. As of 2007, the top 10% of
the U.S. households in terms of income controlled anywhere from 80% to 90% of stocks, bonds, trust funds
and business equity. Over 75% of non-home real estate was also controlled by the same group. Only about
10% of the population benefits from QE, and this is the 10% that has the lowest propensity to consume
from earnings given their wealth. While we do not have comparable data readily available for the EU as a
whole, what is very clear is that the EU households in general rely more on bank accounts, life insurance
and other savings products than do their U.S. counterparts. Moreover, the income inequality in wealthy
European countries such as Germany is considerably less than in the U.S. As such, it is not surprising that
EU citizens are not clamoring for QE or other similar measures unlike the wealthy in the U.S. who cannot
envision a QE-less world.
4. Arguing for and against Unconventional Policy
The primary case that can be made for unconventional monetary policy is that it is a near-term anesthetic.
If a country faces the need for significant economic restructuring which is typically very painful in the
short run, unconventional and aggressive monetary policy might work to offset some of the contraction
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that might occur. Yet, this opiate is decidedly not the cure. There are real costs to unconventional monetary
policy as we have shown above. If these policies allow for significant economic restructuring that might
boost long-term efficiency, and especially by enough to warrant the costs of these measures, then and only
then do they make sense. Importantly, in the absence of real change to address the fundamental issues
that ail an economy, such measures cannot be justified – fiscal policy, however politically difficult, would
be a much preferable alternative.
The problems with unconventional monetary policy are all too obvious and surely not lost on global
policymakers. The reason it is so widely espoused today, even by academics, is that the political dysfunction
in most of the developed world makes any other policy appear impossible. There are many measures that
could have been and still can be adopted to generate sustainable growth in the developed world, but all of
them require structural and political change, and considerable economic pain. As such, unconventional
monetary policy today is being used as an alternative to restructuring, especially in countries like the U.S.
This is precisely the worst possible reasoning for such measures. Unfortunately, the biggest winners from such
policies are the financial plutocracies that make up the current political leadership of most of the affected
countries. Real change with sensible economic policy simply will not happen without political upheaval.
It should be noted that while QE and other such policies might seem to be the only viable ones given the
current political climate, there is no credible way to end these policies once they have been implemented,
absent yet another crisis. The policies that are being discussed involve a modicum of near-term benefit to
certain interest groups at huge long-term costs to societies. It is near-term economic pain that is leading
to the clamor for such policies, but any exit from these measures will almost certainly involve much more
pain than we face today. If it was mal-investment and stupidity of a criminally incompetent financial and
regulatory class that got us into our current mess, it is not clear how compounding the errors should make
anything better.
While the ongoing EU crisis might have brought Mario Draghi one step closer to more aggressive
and unconventional monetary policy, his colleagues at the Fed have already moved firmly down that
path. Even the conservative Bank of Japan might be spurred soon to try something different. The risks
to such unconventional policies are so significant that we do not believe that anyone else outside the
Fed is ideologically committed to such recklessness. Unfortunately, the more the Fed and U.S. market
participants demand such policies, the more the chances of a global crisis with the U.S. dollar and/or bond
market being the focal point.
Investment Implications
We believe that the roadmap for the next several months is becoming clear. The growth outlook globally
remains dismal as is the solvency status of most developed countries. We feel the best opportunities in fixed
income lie in the bonds of solvent countries which have no significant macro problems such as Norway,
Sweden, South Korea, Canada and Australia. On the flip side, we find an abundance of short ideas in
some overly-rich bond markets where prices are in bubble territory such as the U.S., U.K., Japan, and even
Germany where short-term yields are negative.
The odds of a near-term accident in global markets have increased. China and most other nations in Asia,
which have been the major capital exporters, are all facing declines in their trade surpluses and even in
foreign direct investment. This, coupled with still relatively high inflation in many Asian countries, has
reduced their purchases of financial assets in the increasingly strained developed countries. We have not
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UPDATE
yet seen a major realignment to these realities with the exchange rates of the Asian nations appreciating
significantly, nor have we observed much of an improvement in their relatively becalmed stock markets. If
the developing world reflects the status of global liquidity, we expect much more global turmoil beginning
with the U.S. which remains the world’s largest capital importer.
Conclusion
This is the most unpleasant global environment one could have wished for. We have hugely correlated
swings in global markets largely inspired by changes in sentiment, as reality continues to deteriorate. The
facts do not seem to matter because omnipotent governments are sure to launch yet another bailout for
every investor, however misguided they may seem. This is despite the fact that many of these governments
are effectively bankrupt. By continuously manipulating the markets, policymakers are perpetrating in plain
sight the most gigantic Ponzi scheme known to mankind.
Performance Summary at July 31, 2012
Trident Global Opportunities Fund
1 Mth.
3 Mth.
6 Mth.
1 Yr.
2 Yr.
3 Yr.
5 Yr.
10 Yr.
YTD
Since Inception
(Feb. ‘01)
5.3%
1.2%
2.8%
0.4%
-1.6%
15.5%
11.0%
1.2%
10.1%
3.2%
CI Global Opportunities Fund
1 Mth.
3 Mth.
6 Mth.
1 Yr.
3 Yr.
5 Yr.
10 Yr.
15 Yr. YTD
Since Inception
(Mar. ‘95)
5.1%
1.1%
2.5%
-1.6%
15.9%
10.8%
14.0%
1.1%
17.0%
3.1%
Nothing herein should be read to constitute an offer or solicitation by Trident Investment Management, LLC or its principal to provide investment
advisory services to any person or entity. This is not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of
units of the Trident Global Opportunities Fund are made pursuant to the Offering Memorandum only to those investors in jurisdictions of Canada
who meet certain eligibility or minimum purchase requirements. Important information about the Funds, including a statement of the Fund’s
fundamental investment objective, is contained in the Offering Memorandum. Obtain a copy of the Offering Memorandum and read it carefully
before making an investment decision. These Funds are for sophisticated investors only. ®CI Investments and the CI Investments design are
registered trademarks of CI Investments Inc.
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