Employing high-quality active investment managers

There are thousands of investment strategies in Canada. There are less than ten that we recommend routinely. When adding an investment strategy to our roster, it is imperative that we have a strong relationship with the investment team. We must be able to meet with the portfolio managers themselves on a regular basis, to understand their strategy, performance criteria, process, and holdings. We pride ourselves on the on-going access that we are able to achieve.

In a global equity manager, we look for conviction in high-quality businesses around the world, proven track records, consistent strategy, and positioning for growth. With confidence, experience and a long-term strategy, investors are best positioned to achieve their long-term goals.

Diversification within equities

Many investors think of the traditional 60% equity, 40% fixed income portfolio as the standard for risk mitigation. Investors also believe that age plays a factor in fixed income allocations. We strongly believe that investors are able to mitigate risk just as effectively with no fixed income. We often say that we choose to own successful companies, instead of lending to them.

Equities can have varying risk profiles, depending on their industry, where they are domiciled, where and how they generate revenue, their capital structure and their size, among other factors. The managers we work with understand each of these factors. We also assess overlap between investment managers. No two investment managers that we employ are alike, and we ensure their strategies complement each other.

Active management

Active share is a measure of active management, calculated as the percentage of a manager's investments that differs from the benchmark index. In practice, an active equity fund manager can only look to achieve outperformance (in excess of fees), by being different from the benchmark index. Research suggests that investors are better off investing with active managers that have an active share of at least 60%. We work with active managers that have an active share of 90% or above.

We believe in the long-run, the inclusion of high conviction, actively managed investments in a customized plan achieves our clients’ goals.