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New hedge fund uses PhD-researched theory to help protect investors

Date: Tuesday, February 17, 2004

What is believed to be the world's first hedge fund designed to protect investors during times of market distress will be officially launched next week during a reception at the Fields Institute in Toronto. Investments that are minimally affected by market volatility are the focus of the Quadrexx Market Neutral Performance Fund (QMNPF). The QMNPF is a fund of funds whose theory originated from a PhD study at the University of Toronto conducted by both mathematicians and physicists. In some ways, the QMNPF is similar to other fund of hedge funds, diversifying portfolios to protect investors. Quadrexx takes this one step further by focusing on a methodology that consists of mathematical equations and a unique management style which guarantees fund managers are working well as a team. "This means that we keep the funds as uncorrelated as possible so that returns remain stable even if disaster strikes. Also, Quadrexx's selection- process for hedge funds ensures positive returns under most market conditions," said Miklos Nagy, fund creator and CEO of Quadrexx Asset Management Inc. "On an annual basis, it's estimated that investors would see positive returns 95 percent of the time." Over 10,000 doctoral-hours have proven this concept which was back-tested from November 2003 to November 1999. It resulted in a rate of return in excess of 20 percent per annum and a volatility of less than that of a well- diversified bond portfolio. Sigma Analysis & Management Ltd., which evolved from the study, today advises the Quadrexx Fund. Sigma was incubated and spun off by the Fields Institute for Research in Mathematical Sciences which is affiliated with the University of Toronto and dedicated to research in mathematical sciences. The QMNPF is a fund of funds consisting of at least 45 U.S. and International hedge funds. This is the first in a series of soon-to-be released products from Quadrexx Asset Management Inc. Quadrexx offers quantitatively managed products with high returns, low risk and consistent performance, all independent of market conditions. Miklos Nagy is considered the leading authority on hedge funds and is the co-founder of the industry's first educational firm, Canadian Hedge Watch Inc. He is also co-author of the bestseller Hedge Funds For Canadians.