Kensington Hedge Fund 1

Kensington is a leader in Alternative Investment Solutions in Canada. As well as having a long history in the Canadian Private Equity market and more recently in Infrastructure, Kensington is a Canadian Hedge Fund Specialist. We are experts at creating multi-manager, multi-strategy, managed account Hedge Funds. Kensington excels in designing investment solutions for smaller institutions and high net worth individuals.

The Kensington Hedge Fund 1 consists of approximately ten Emerging Canadian hedge fund managers chosen by Kensington for the purpose of providing diversified exposure to newer and smaller Canadian Hedge Fund managers.

KENSINGTON HEDGE FUND 1 (KHF1) INVESTOR UPDATES

2012

Key Features of the Fund

Gain Exposure to the best emerging hedge fund managers in Canada.
Benefit from a diversified portfolio in one Fund.
Reduced stacking of fees.
Capture enhanced liquidity through monthly redemption.
Utilize managed accounts to minimize operational risk exposure.

Benefits of Diversification for Investors

Eliminates single manager risk.
Diversification across several managers normally requires a larger commitment by investors.
Optimum diversified portfolio has between 8 and 12 managers - adding more managers flattens the return curve and merely diversifies away alpha (confirmed by EDHEC study).
Diversification means avoiding closely correlated strategies.
Diversification involves using multiple Prime Brokers – not all our assets are with one financial institution.

Manager Selection Process

Kensington maintains an extensive database of Emerging Canadian Hedge Fund Managers with over 100 Canadian Managers being tracked.
Kensington applies its Proprietary Due Diligence process.
Data analysis results in approximately 25 managers for closer monitoring.
The Kensington Hedge Fund Investment Committee reviews all potential new entrants to portfolio.
Resultant review leads to the selection of approximately 10 managers.
Portfolio composition is subject to rigorous ongoing testing.

Hedge

Active Portfolio Management

Managed Account provides enhanced transparency to Kensington.
Dynamic monitoring of portfolio on a daily, weekly and monthly basis allows for strong controls.
Deep understanding of activity and performance to quickly identify any style drift.
Active portfolio management using our proprietary models.
Outliers (both strong and weak performers) are more closely investigated.
Quarterly review of portfolio explores whether changes are required with weaker performers removed and stronger performers introduced.
Maintain a list of approximately 15 managers “on deck”.
Rigorous monitoring of marketplace for future successful managers for potential inclusion in the Fund.

KENSINGTON HEDGE FUND 1

Kensington Hedge Fund 1