Some of the most powerful tools in today’s investment playbook started as academic arguments. But they didn’t reshape practice until they moved off the page and into the hands of portfolio managers, risk teams, and product designers. Harry Markowitz’s efficient frontier, Bill Sharpe’s capital asset pricing model (CAPM), Eugene Fama and Kenneth French’s style factors, and Edward Qian’s risk parity framework all began as journal arguments. Their ideas now sit inside portfolio guidelines, ETF rulebooks, and risk dashboards worldwide. The leap from theory to real-world relevance is what gives high-quality research its staying power.
As CFA Institute Research and Policy Center celebrates the 80th Anniversary of the Financial Analysts Journal and 60th Anniversary of the Research Foundation, it is an opportune time for investment professionals to reflect on the impact of practitioner-relevant research on the industry’s evolution.
Uncovering practitioner-relevant insight is at the core of the Hillsdale Investment Management–CFA Society Toronto Research Award, which is accepting submissions for 2025. Any academic or practitioner can submit their research for consideration, regardless of their geographic location. Consideration is given to any original, unpublished work that sheds light on Canada’s capital markets and helps investors allocate capital more intelligently. Topic areas include public and private markets governance, sustainability, and market microstructure. The deadline is fast approaching (June 27).
Past winners include a six-factor model tailored to Canadian equities that helps portfolio managers navigate the “factor zoo,” a study quantifying when currency hedging adds value to international equity funds, and an analysis of how complex instrument allowances affect mutual fund performance and risk.
Scholarship only changes behavior when it solves a concrete problem and arrives in a form investors can apply. Market context makes that harder. A factor model that works in one region might falter in another due to differences in industries, regulations, and investor behavior. That is why competitions like the Hillsdale Award — focused on market-specific research — help innovative ideas travel faster and land with greater impact.
Research in Action: 3 Hillsdale Award-Winning Papers
Navigating Canada’s Factor Zoo (2024) introduced a six-factor model built on three decades of data of Canadian equity returns, giving portfolio managers a clear, evidence-based shortlist for factor investing. Using CFMRC-TSX and COMPUSTAT files for July 1991 to December 2022, the authors measured 17 widely cited style factors across 11 academic frameworks and ran redundancy, spanning, and anomaly-pricing tests. Classic HML and UMD signals added little once profitability, investment, and mispricing variables were included. The data pointed to six variables (market, size, monthly-updated value, return-on-equity, expected growth, and post-earnings-announcement drift) that explained Canadian returns more consistently than any legacy model. This result trimmed the “factor zoo” to a manageable practitioner toolkit for screening, attribution, and product design. It identifies where global multifactor products may be mis-aligned with local risk premia.
Currency Hedging and Tracking Error (2023) provided evidence that actively hedging foreign exchange exposure with currency forwards can lift international equity fund performance. It gave managers evidence-based guidance on when FX hedging pays. The study matched 55,000 forward contracts to 1,279 US-registered international equity funds (2004-2019) and sorted users into “exposure managers,” “occasional users,” and “non-users.” Systematic hedgers cut benchmark-relative volatility by about one percentage point and outperformed unhedged peers by roughly 120 basis points (bps) per year, benefits that were largest during FX-volatile quarters. Forward books tilted toward currencies with favorable carry and momentum profiles, indicating that a disciplined overlay can function both as a risk-control and a modest return engine. Counter-factual tests suggested non-users left 40 to 60 bps of annual performance on the table. The paper supplies CIOs with quantitative thresholds for when the cost of forwards is likely to be rewarded and a template for linking hedge ratios to currency-factor signals.
Complex Instrument Allowance at Mutual Funds (2020) revealed evidence that letting mutual funds use leverage, derivatives, and other complex instruments erodes returns and increases downside risk, signaling to fund boards and regulators that fewer restrictions can hurt investors. Analzsing SEC N-SAR filings for 4,793 US domestic equity funds (2000-2015), the authors built an “allowance score” for leverage, derivatives, and illiquid-asset permissions, then linked those permissions to daily performance and risk. Funds with the broadest latitude under-performed more constrained peers by 1.3 percentage points of four-factor alpha a year and carried higher market beta and downside semivariance, particularly in bear markets. Derivative authorizations showed the strongest negative relation to risk-adjusted returns, while better board oversight and larger fund size mitigated the drag. The findings give trustees and regulators a data-backed caution: expanding a fund’s toolbox without commensurate monitoring can lead to higher volatility and lower investor welfare.
(See all past winning research papers)
Why This Matters to the Wider Investment Community
Sharper Tools: The winning paper often surfaces updated factor libraries, hedging templates, or governance checklists that teams can A/B test in live portfolios.
Diversity of Thought: A global author pool examining a mid-size market helps reduce home bias and brings fresh ideas across borders.
Faster Uptake: Because the award sits inside a professional body, useful findings reach practitioners, directly compressing the time from research to real-world application.
Award Details
The Judges: Every submission is judged by a panel of CFA charterholders. This means only research with clear, test-ready insights and practical relevance survive the review process.
The Award: The award, which comes with a $10,000 (CAD) prize, helps empower winning researchers to continue ground-breaking research through flexible funding they can redirect to additional research funding, conference travel, or their next projects, without strings attached.
High Visibility with Investment Professionals: The winning paper and authors gain visibility among more than 11,500 CFA charterholders in Canada and the broader global CFA Institute community. Publication can lead to stronger citation momentum and, more importantly, faster adoption in practice. The winning paper is unveiled at CFA Society Toronto’s Annual Investment Dinner, promoted through Society press channels, and published in The Analyst, CFA Society Toronto’s quarterly magazine.
How to Submit
Submission deadline: 27 June 2025, 23:59 ET
Eligibility: Open to global researchers; submissions must focus on Canadian capital markets.
Participants: Academics (students and professors) and practitioners Paper Requirements: A 1,500 to 2,000-word executive summary and a full, unpublished research paper not under consideration elsewhere.
How to Submit: Online at https://www.cfatoronto.ca/awards-scholarships/ResearchAward
If you liked this post, don’t forget to subscribe to the Enterprising Investor.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Image credit: ©Getty Images / Ascent / PKS Media Inc.
Professional Learning for CFA Institute Members
CFA Institute members are empowered to self-determine and self-report professional learning (PL) credits earned, including content on Enterprising Investor. Members can record credits easily using their online PL tracker.
