June 2018 | Stephen Reynolds & Qing Ji
ESG – A fundamental approach
Small cap.Global. Alpha.
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.1
PRESENTERS
QING JIPortfolio Manager
STEPHEN REYNOLDSVice President, Institutional
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.2
• Introduction
• ESG defined
• ESG progress
• Why is ESG important for investments
• ESG integration in practice
• Outcome and results
• Questions and answers
OUTLINE
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.3
*Progress Manager of Managers Program: California State Teachers’ Retirement System.
FIRM• Montreal-based Small Cap specialist with assets under management of over US$ 1.3B
» International Small Cap
» Global Small Cap
• Founded in 2008, in partnership with the Connor, Clark & Lunn Financial Group (over US$ 59B AUM)
• Investment team of 5 portfolio managers and 2 analysts
STRATEGY• Quality Growth – True Small Cap – High Conviction – Long Term • Environmental, Social & Governance (ESG) integrated into investment process• Carbon footprint significantly below the index: 65% less emissions intense• Value add through security selection - mitigating style, currency & industry risk• Rigorous portfolio construction and risk management
INTRODUCTION
1.3BAUMUS$
2008Founded in
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.4
ENVIRONMENTAL• Climate change: CO2 emissions disclosure• Natural resources use disclosure: energy, water, land, raw material• Waste management: toxic emissions, waste, packaging material, electronic waste• Environmental-friendly product• Environmental-friendly practice: green building, activities
SOCIAL• Human capital: human rights, health and safety, work-life balance, HR development,
supply chain labor standards• Product safety• Return to society
GOVERNANCE• Corporate governance: board structure, transparency, independence, executive pay• Business ethics: countering corruption and fraud, anticompetitive practices• Shareholder rights and stakeholder interaction
ESG DEFINED
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.4
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.5
ESG PROGRESS
A signatory to the United Nations – Principles for Responsible Investment (PRI)
ESG Policy
A member of the Responsible Investment Association (Canada)
CEO Remuneration Guidelines
ESG Questionnaire to companies
2012 2013 2014 2015 2016 2017 2018
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.6
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha. 6
• Good ESG practices reduce risk and enhance return
CHALLENGES FOR SMALL CAP INVESTING• Lack of ESG data from companies• Lack of ESG coverage by service providers
OUR ESG APPROACH• Raw data: company website, annual reports, meetings with management• Combination of quality screen, investment themes & fundamental analysis • Internal template to calculate an ESG score for any individual company • Integration of ESG score into our valuation tools through adjustments to discount rates• Actively incorporate ESG issues into proxy voting• Engage with companies in which we invest
WHY IS ESG IMPORTANT FOR INVESTMENTS?
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.7
HOW ESG FITS INTO INVESTMENT PROCESS
• Revenue growth, profitability and balance sheet
QUALITY SCREEN
• Innovation, consumer,
environment, demographics,
outsourcing
INVESTMENT THEMES
• ESG criteria Scores
• Target market, competitive advantages,
growth strategy
FUNDAMENTAL ANALYSIS
• Discounted Cash Flow method
• High ESG score = low ESG risk
• Discount rate adjustment
VALUATION
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.8
MAXIMUM SCORE: 5• ESG Report• Environmental• Social• Corporate Governance• Recognition
Company ESG Report E S G Recognition Total
ESG ScoreIndependent
Directors ESG Excellence
Savills Plc 1 1 1 1 1 5.0 80% A member of FTSE4Good Sustainability index
Vitasoy Intl Holdings Ltd. 1 0.8 1 1 0.5 4.3 50% Numerous awards of Outstanding Corporate Social Responsibility
Horiba 1 0.8 0.8 1 0.5 4.1 38% A member of JPX-Nikkei Index 400
SCORING TEMPLATE
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.9
• Scoring is relative and each company is compared to its industry and regional peers.
• Eligible holding should have a minimum score of 0.5 for E, S, and G each.» Max score per category: 1» No action but required 0» No action due to little risk 0.5» Average practice 0.5» Excellent practice 1» Formal ESG reporting 1» Formal reporting on G only 0.3» Recognition: ESG index member 1
or ESG award winner 0.5
SCORING GUIDELINES
>=444%
[3.5,4)20%
[3,3.5)20%
[1.5,3)16%
GLOBAL ALPHA INTERNATIONAL SMALL CAP PORTFOLIO ESG SCORE DISTRIBUTION
All data as of March 30, 2018.
ESG Score WACC Adjustment
1.5 (inclusive) – 2.5 10% premium
2.5 (inclusive) - 3 5% - 10% premium
3 (inclusive) – 3.5 No change
3.5 (inclusive) - 4 5% - 10% discount
4 (inclusive) – 5 10% discount
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.10
VITASOY INTERNATIONAL HOLDINGS LTD.STOCK EXAMPLE
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STOCK EXAMPLEVitasoy International (345 HK) – Score 4.3
ESG REPORT (1)• Comprehensive
ENVIRONMENTAL (0.8)• Reduce energy & fresh water use • Reduce discharge of solid waste, hazardous waste, and wastewater
SOCIAL (1)• Workforce supports: health benefits, training, workplace safety programs and recreational programs• Community: promote public health, local volunteer work, and donations
GOVERNANCE (1)• Board: 5/11 independent directors. 2 women.• Shareholder friendly: Yes. Effective communication.• Transparency: various board committees (Audit, Corporate Governance, Nomination, Remuneration),
Compliance Manual, Connected Transaction Manual, Corporate Disclosure Policy
RECOGNITION (0.5)• “Hong Kong Green Organization (2015-2017)” from Environmental Campaign Committee and Environmental
Protection Department• “Manpower Developer” awarded by the Employees Retraining Board• The “10 Years Plus Caring Company” Logo from Hong Kong Council of Social Services
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.12
STOCK EXAMPLE
QUALITY METRICS
THEME
MANAGEMENTTEAM ASSESSMENT
FUNDAMENTALANALYSIS
INTRINSIC VALUE
Consumer
Target market: $50B per year, growing at 5%Competitive advantage: Household brand, Leading market share in AsiaGrowth strategy: Distribution
Intrinsic value: HK$32.80Currently trading: HK$24.85
• Stable management team• Founding family owns 63%• Excellent ESG practice
Market Cap: HK$26.3BSales: HK$6.5B3 yr sales growth: 9.0%
P/E (2019): 32.6xDividend yield: 1.4%Net Debt/EBITDA: - 0.9x
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.13
• ESG Questionnaire and CEO Remuneration Guidelines to Companies• Meeting / Call with Management• Proxy Voting
ENGAGEMENT WITH COMPANIES
2017 Totals
Against Management 102 7.76%With Management 1212 92.24%Against ISS 7 0.53%With ISS 1307 99.47%Withhold 10 0.76%Total Ballots 1314 100%
SUMMARY OF PROXY VOTING
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• By investing in companies, Global Alpha is conscious that it finances the emission of greenhouse gases.• The Global Alpha International Small Cap Portfolio is 65% less emissions intense than its benchmark, the MSCI
EAFE Small Cap Index.
CARBON FOOTPRINT ANALYSIS
*On an investment of USD 100 million. ¹Scope 1 is defined as ‘emissions from sources that are owned or controlled by the organization’, Scope 2 is defined as ‘emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g. chilled water) generated upstream from the organization’, Scope 3 is defined as ‘emissions that are a consequence of the operations of an organization, but are not directly owned or controlled by the organization’. ²The carbon footprint of non-reporting companies is estimated.³Emissions based on Scope 1&2 onlyAs of June 30th, 2017
Source: ISS-Ethix Climate Solutions 2017, Climate Impact Assessment for Global Alpha International Small Cap Portfolio
Total Emissions (tCO2e, Scope 1,2 & 3¹)*
Percentage of Disclosing Holdings*²
Emissions (tCO2e) per USD Million Invested*³
Weighted Emissions (tCO2e/Weighted Revenue
USD Million*³
International Small Cap Portfolio 23,517 44% 75.6 192.04
MSCI EAFE Small Cap Index 78,869 34% 218.23 281.67
Difference
55,352 10% 65% 32%
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CARBON FOOTPRINT ANALYSISInternational Small Cap Portfolio
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Global Alpha International Small Cap MSCI EAFE Small Cap
Vertical axis represents Absolute Scope 1 & 2 emissions (tCO2e) as of June 30, 2017, on an investment of USD 100 million
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.16
• The Global Alpha International Small Cap Portfolio is associated with emissions (tCO2e) much lower than its benchmark the MSCI EAFE Small Cap Index.
COMPARISON OF TOTAL EMISSIONS
TOTAL EMISSIONS FROM INTERNATIONAL SMALL CAP PORTFOLIO
Portfolio BenchmarkScope 3 15,956 57,046Scope 1 & 2 7,561 21,823
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
As of June 30, 2017.
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.17
QUESTIONS AND ANSWERS
• Quality Growth – True Small Cap – High Conviction – Long Term
• Environmental, Social & Governance (ESG) integrated into investment process
• Carbon footprint significantly below the index: 65% less emissions intense
• Value add through security selection - mitigating style, currency & industry risk
• Rigorous portfolio construction and risk management
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.
APPENDIX
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.19
March 30, 2018 Portfolio Benchmark* Over/Under
North America 0.0 0.0 0.0
Europe & Middle East 57.8 57.5 0.3
Japan 29.2 31.3 -2.2
Asia (ex-Japan) 13.0 11.2 1.9
Other 0.0 0.0 0.0
Portfolio Benchmark
Less than $1 Billion 9.5% 15.2%
$1 - $3 Billion 50.6% 45.0%
$3 - $5 Billion 24.5% 24.9%
Over $5 Billion 9.0% 14.9%
PORTFOLIO COMPOSITION: INTERNATIONAL SMALL CAP PORTFOLIO
SECTOR BREAKDOWN (%)
MARKET CAP ALLOCATION (%)1 REGION WEIGHTS (%)
*Benchmark: MSCI EAFE Small Cap (Net)(USD). ** Value may differ due to rounding.1 All data in US Dollars as of March 30, 2018.
Portfolio at March 2018 Benchmark* Under/Over
Portfolio at December 2017
Change in Period**
Energy 1.8 2.4 2.1 -0.3
Materials 7.8 9.4 8.4 -0.5
Industrials 24.0 21.4 25.8 -1.8
Consumer Discretionary 19.0 15.8 20.8 -1.8
Consumer Staples 7.2 6.8 5.8 1.4
Health Care 6.2 7.3 5.8 0.4
Financials 7.2 11.6 7.3 -0.1
Information Technology 10.2 11.5 9.2 0.9
Telecommunication Services 0.6 1.3 0.8 -0.2
Utilities 1.4 2.1 2.0 -0.6
Real Estate 8.3 10.5 8.8 -0.5
Cash 6.4 0.0 3.2 3.2
-0.6%
-1.6%
2.6%
3.2%
0.4%
-1.1%
-4.4%
-1.4%
-0.7%
-0.6%
-2.2%
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*Inception Date: December 31, 2009.All returns are gross of fees except where noted. Gross performance figures are stated after trading fees and before management fees, performance fees and operating expenses. Operating expenses include items such ascustodial fees for segregated accounts and for pooled vehicles would also include charges for valuation, audit, tax and legal expenses. Such additional operating expenses would reduce the actual returns experienced by investorsin segregated accounts and pooled vehicles. Added value may differ due to rounding to 1 decimal place. Benchmark’s performance is net of foreign dividend withholding taxes.Sources: Connor, Clark & Lunn Financial Group, Thomson Datastream.
ANNUALIZED RETURNS (USD)
ANNUAL RETURNS (USD)
PERFORMANCE INTERNATIONAL SMALL CAP PORTFOLIO
Ending March 30, 2018 MTD QTD YTD 1 Year 2 Year 3 Year 4 Year 5 Year SI*
International Small Cap Composite 0.7% 2.4% 2.4% 26.3% 21.3% 16.7% 13.1% 16.3% 14.4%
MSCI EAFE Small Cap (Net) -1.1% 0.2% 0.2% 23.5% 17.1% 12.3% 8.2% 11.1% 10.4%
Added Value 1.8% 2.2% 2.2% 2.8% 4.2% 4.5% 4.9% 5.2% 4.0%
Composite Net Returns 0.6% 2.2% 2.2% 25.3% 20.3% 15.7% 12.2% 15.3% 13.5%
Ending December 31 2017 2016 2015 2014 2013 2012 2011 2010
International Small Cap Composite 36.9% 5.0% 19.0% -1.0% 29.6% 23.0% -15.3% 29.6%
MSCI EAFE Small Cap (Net) 33.0% 2.2% 9.6% -4.9% 29.3% 20.0% -15.9% 22.0%
Added Value 3.8% 2.8% 9.5% 4.0% 0.3% 3.0% 0.6% 7.6%
Composite Net Returns 35.7% 4.1% 18.0% -1.8% 28.6% 22.0% -16.1% 28.6%
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.21
ROBERT BEAUREGARDCIO & PORTFOLIO MANAGER
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2008-Present: Chief Investment Officer and
Portfolio Manager
Natcan Investment Management1999-2008: Senior Vice President,
Small Cap Equities
Caisse de dépôt et placement du Québec1997-1999: Portfolio Manager
Alcan Aluminium1991-1997: Various management roles
Grant Thornton1989-1991: Management Consultant
IBM Canada1988-1989: Financial Analyst
Department of National Defense1981-1988
EDUCATION
1986: BSc, Royal Military College1988: MBA, McGill University1990: CMA1991: CMC1996: CFA2014: CPA
DAVID SAVIGNACPORTFOLIO MANAGER, EUROPE
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2009-Present: Portfolio Manager2008-2009: Analyst
Natcan Investment Management2004-2008: Global Small Cap Co-Manager, Small
Cap Analyst, Risk & Performance, Senior Analyst
TAL Global Asset Management2003: Pooled Fund Analyst
Desjardins Securities2000-2001: Assistant Broker
EDUCATION
2001: BSc, HEC Montreal2002: Spanish Studies, Universidad
Regiomontana (Mexico)2016: CFA
BIOGRAPHIES
QING JIPORTFOLIO MANAGER, ASIA-PACIFIC
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2011-Present: Portfolio Manager2008-2011: Analyst
Bank of Canada2008: Senior Analyst, Financial Markets
Laurentian Bank Securities2006-2007: Equity Research Analyst,
Financials Sector
ING Private Bank Asia Ltd (Singapore)2004: Portfolio Management Associate,
European Desk
Credit Lyonnais Singapore1999-2004: Assistant Credit Manager,
Project Analyst
Temenos Systems SA (Switzerland)1997-1999: Banking Consultant
EDUCATION
1993: BA, Xiamen University (China)1996: MA, Shanghai University of
Finance and Economics2007: MBA, McGill University2011: CFA
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.22
SERGE DEPATIEPORTFOLIO MANAGER, NORTH AMERICA
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd. 2016-Present: Portfolio Manger 2015-2016: Analyst
NCP Investment Management2011-2015: Managing Partner,
Equities and Investments
Natcan Investment Management2006-2011: Global Equities, Portfolio Manager2003-2006: Small Cap Analyst
The Jitney Group / Hampton Securities2000-2003: Equity Research Analyst
Sannica Biotech1999-2000: Vice President
Biosyntech1997-1999: Vice President Sales
CQI-Biomed1995-1997: Project Manager
EDUCATION
1991: BEng, McGill University1994: MBA, Concordia University1999: CSC
Passed Level I of the CFA exam
SAIN GODILASSOCIATE PORTFOLIO MANAGER, NORTH AMERICA
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2017-Present: Associate Portfolio Manager2011-2017: Analyst2010-2011: Junior Analyst
Industrial AllianceSummer 2010: Equity Research Analyst
John Molson School of Business2008-2010: Investment Lab Monitor
ICICI Bank, Goa, India2004-2005: Asset Manager
Vinray Education Consultancy, Goa, India2002-2003: Office Manager
Cool Comfort – start up clothing company, Goa, India1999-2002: Entrepreneur
EDUCATION
1999: BComm, Goa University (India)2011: BComm, Concordia University2013: MSc, Concordia University
2018 Level III in the CFA program
BIOGRAPHIES
JANINE TRAN LAMMANAGER, CLIENT RELATIONSHIPS, RISK, COMPLIANCE AND OPERATIONS
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2017-Present: Manager, Client Relationships, Risk,
Compliance and Operations
HSBC Private Wealth Services (Canada) Inc.2015-2017: Investment Counsellor
National Bank of Canada2014-2015: Manager, Portfolio Manager, Analysis and
Monitoring2009-2014: Senior Analyst
RBC Dominion Securities2005-2009: Associate Advisor
TAL Global Assets Management Inc.2004-2005: Coordinator, Information Management
RBC Dominion Securities1999-2004: Advisor Assistant
Elise Pépin et Associé1998-1999: Mutual Funds Junior Analyst
London Life1997-1998: Insurance Representative
EDUCATION
1997: BA, Political Science, University of Montreal2009: CFA
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.23
ANTHONY SUTTONANALYST, TRADER, EUROPE
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2018-Present: Analyst, Trader
Eight Capital (formerly Dundee Capital Markets)2014-2017: Research Associate
Jarislowsky Fraser2013-2014: Junior Analyst
Dundee Capital MarketsSummer 2012: Research Associate Intern
Goodman & Company Investment CounselSummer 2011: Portfolio Analyst Intern
NCJ, United Kingdom1995-2005: Welder, Team Leader
EDUCATION
2012: BComm, Finance, Concordia UniversityPassed Level I of the CFA exam
TRACY LIANALYST, ASIA-PACIFIC
INDUSTRY EXPERIENCE
Global Alpha Capital Management Ltd.2018-Present: Analyst2017: Co-op, Investment Analyst
SIAS Fund, Simon Fraser University2016-2017: Equity Analyst
Beedie School of Business, Simon Fraser University2017: Research Assistant
Harbin Bank, Harbin, China2013-2014: Management Trainee
National Development and Reform Commission, Beijing, China2011-2012: Administrative Intern
EDUCATION
2011: BA, China Foreign Affairs University, China
2013: MA, Japanese Literature, China Foreign Affairs University, China
2017: MSc, Finance, Beedie School of Business, Simon Fraser University2018 Level III in the CFA program
BIOGRAPHIES
COMPLIANCE STATEMENTGlobal Alpha Capital Management Ltd. (Global Alpha) claims compliance with theGlobal Investment Performance Standards (GIPS ®) and has prepared and presentedthis report in compliance with the GIPS standards. Global Alpha has beenindependently verified for the periods from June 30, 2011 to June 30, 2017. The Verification assesses whether (1) the firm has complied with all the compositeconstruction requirements of the GIPS standards on a firm-wide basis and (2) the firm’spolicies and procedures are designed to calculate and present performance in DEFINITION OF FIRMGlobal Alpha is an independent and privately owned Canadian investmentmanagement firm focused exclusively on managing global and EAFE small capstrategies. Their 'core' style combines growth and value characteristics, while their approachfocuses on bottom-up security selection through fundamental research.
DEFINITION OF DISCRETIONDiscretion is the ability of Global Alpha to implement its intended strategy. This alsoincludes any sub advised accounts in which Global Alpha has discretionary authority.A portfolio would be defined as non-discretionary if an account contains investmentguidelines significantly restricting the ability to manage the assets according to theinvestment firm’s strategy (i.e., liquidity requirements that limit the manager’sdiscretion, significant client holding restrictions). Accounts would also be defined asnon-discretionary if Global Alpha only provides “Model Portfolio” services to thoseportfolios and does not directly execute trades.
GLOBAL ALPHA INTERNATIONAL SMALL CAP COMPOSITEThis composite consists of portfolios invested in international small cap equities inboth developed and emerging markets. The benchmark is the MSCI EAFE Small CapNet Index. The investment objective is to maximize long-term total return throughprudent investment in international small capitalization stocks and generate returnsequal to the return of the MSCI EAFE Small Cap Net Index (CDN$) plus 3.0% over a fullmarket cycle. The Global Alpha International Small Cap Composite typically invests in50 - 70 international small capitalization stocks. Tracking error is targeted at between3% and 6% relative to the benchmark.
BENCHMARKThe composite benchmark is calculated monthly based on the market-value-weightedaverage return of the benchmarks associated with the composite's member portfolios.Current benchmark is 85.3% MSCI EAFE Small Cap Net & 12.4% MSCI EAFE Small Cap+ Canada Net & 2.2% MSCI ACWI ex USA Small Cap Net Index.Prior to the addition of a new composite member portfolio in November 2016, thebenchmark was 100% MSCI EAFE Small Cap Net.
CALCULATION OF PERFORMANCE RETURNS Client securities and pooled fund net assets are valued on a daily basis using marketprices and foreign exchange rates obtained from independent sources. Performance returns are presented gross of management fees and net of trading costs.Foreign income is accrued net of withholding taxes. Reclaimable withholding taxes arerecognized if and when received by the custodian. Benchmark returns are net ofwithholding tax.Performance returns are calculated daily.
CURRENCYPerformance is reported in U.S. Dollar($).
MEASURE OF RISKInternal dispersion is calculated using the asset-weighted standard deviation of annualgross returns of those portfolios that were included in the composite for entire year. For those years when less than six portfolios were included in the composite for the fullyear, no dispersion measure is presented. Three-year volatility measures are notcalculated where the composite has under 3 years of performance.
STANDARD FEE SCHEDULE85 bps of ending net assets annually
COMPOSITE CREATION DATEComposite creation date: December 2009
LIST AND DESCRIPTION OF THE FIRM'S COMPOSITES A complete list of composites and their descriptions (including composites that havebeen terminated within the last five years) is available on request.
ADDITIONAL INFORMATIONA copy of Global Alpha's GIPS Policies & Procedures for valuing portfolios, calculatingperformance and preparing compliant presentations is available on request.
PRESENCE, USE AND EXTENT OF LEVERAGE OR DERIVATIVES The composite may invest in derivatives for hedging purposes or other non-speculativepurposes. No leveraged investments are permitted. The composite may partly hedge itscurrency exposure from time to time. Hedging transactions will not perfectly offset thecomposite's currency exposure, such that the composite will be subject to activecurrency exposure which will vary depending on the securities held at any time and thecurrency in which those securities are denominated.
COMPOSITE NAME CHANGEOn May 1 2015, the composite name changed from Global Alpha EAFE Small CapComposite to Global Alpha International Small Cap Composite.
MINIMUM ACCOUNT SIZEMinimum portfolio size for the composite is $1,000,000.
OTHER DISCLOSURESPrices and exchange rates for valuation purposes are consistent across all portfoliosutilising WM/Reuters 4:00 p.m. London exchange rates and Thompson Reuters valuationsources. Global Alpha Capital Management Ltd. is a Canadian corporation registered with thesecurities regulators in Ontario, Quebec and British Columbia as Portfolio Manager, asInvestment Fund Manager in Ontario and Quebec and registered as an InvestmentAdviser with the US Securities & Exchange Commission. We are not aware of any conflictbetween the laws and/or regulations of these jurisdictions and the GIPS standards.The firm has not used subjective unobservable inputs for valuing portfolio investments.Prior to 2017, Tracking error target was 4% - 6.5% relative to the benchmark.
OWNERSHIPGlobal Alpha Capital Management Ltd. is 49% owned by the Connor, Clark & LunnFinancial Group Ltd. Other affiliated companies are:
• Baker Gilmore & Associates Inc.• Banyan Capital Partners• Connor, Clark & Lunn Infrastructure Ltd.• Crestpoint Real Estate Investments Ltd.• Connor, Clark & Lunn Investment Management Ltd.• MidStar Capital Corp.• NS Partners Ltd• PCJ Investment Counsel Ltd.• Scheer Rowlett & Associates Investment Management Ltd.
To update Intranet file save as a WMF to \\v-file-01\Data$\Shared\Shared\IRG\Composites -Formatted\GA\LinksM\Links GLOBAL ALPHA INTERNATIONAL SMALL CAP COMPOSITE
YearTotal Return
(Gross of Fees)Total Return (Net of Fees) Benchmark*
# ofPortfolios Market Value
% of FirmAssets
Internal Dispersion
Composite 3-YearVolatility
Benchmark 3-YearVolatility
2017 36.86% 35.73% 32.62% 9 $504,495,362 48.50% N/A 10.93% 11.72%
2016 5.02% 4.14% 2.29% 5 $170,616,926 33.82% N/A 11.35% 12.27%
2015 19.04% 18.05% 9.59% 3 $77,153,110 22.20% N/A 9.71% 11.42%
2014 -0.98% -1.82% -4.95% 3 $30,570,246 16.79% N/A 11.83% 13.51%
2013 29.64% 28.57% 29.30% 3 $24,984,496 15.55% N/A 16.71% 16.37%
2012 23.02% 21.99% 20.00% 1 $2,549,511 1.72% N/A 20.17% 20.12%
2011 -15.34% -16.07% -15.94% 1 $2,074,434 2.57% N/A N/A N/A
2010 29.63% 28.56% 22.04% 1 $2,453,598 4.15% N/A N/A N/A
#N/A N/A N/A N/A N/A N/A N/A N/A N/A
#N/A N/A N/A N/A N/A N/A N/A N/A N/A
CompositeComposite
*The benchmark is a combination of the MSCI EAFE Small Cap Net and MSCI EAFE Small Cap + Canada Net Index. Current benchmark is 85.3% MSCI EAFE Small Cap Net & 12.4% MSCI EAFE Small Cap + Canada Net & 2.2% MSCI ACWI ex USA Small Cap
Net Index.
24
Warren Stoddart (Co-CEO)
Mike Freund (Co-CEO)
Michael Walsh (Managing Director)
Lindsay Holtz (Managing Director)
Lee Damji (Managing Director)
INSTITUTIONAL SALESBrent Wilkins (CAN)Eric Hasenauer (US)
Institutional Sales
INSTITUTIONAL STRATEGY
Peter Muldowney
Strategic Exchange
Investment Solutions
INVESTMENT RESOURCES
Andrew Lefevre (CAO)
Portfolio Administration
Trade Administration
Transition Management
Client Reporting
ACCOUNTING & HR Steve Affleck (CFO)
Corporate Accounting
Human Resources
Tax
LEGAL & COMPLIANCEPatrick Robitaille
(General Counsel)
Legal
Compliance
Company Secretarial
Office Services
BUSINESS ANALYTICSSuzanne James (CBA)
Investment Data & Analytics
Portfolio Compliance
Operational Risk
INFORMATION SYSTEMS
Lee Damji (CIO)
Network Systems
CRM & Corporate Systems
Trading &Compliance Systems
Portfolio Management Systems
Portfolio Administration Systems
Security, Proj Mgmt &Enterprise Architecture
MARKETING SERVICES & PRODUCT
Greig McKenzie (CMO)
Product Management & Development
CRM Database Management
Web/Intranet
Communications
RFP & Consultant Databases
Collateral Management
Private Markets Accounting & Admin
GLOBAL ALPHA CAPITAL MANAGEMENT | Small cap. Global. Alpha.25
BUSINESS AND OPERATIONAL MANAGEMENT
1800 McGill College, Suite 2310 Montreal, Quebec H3A 3J6 Canadawww.globalalphacapital.com