INVESTMENT POLICY STATEMENT

Transcription

1 Paul Shiptn CIM Prtfli Manager HllisWealth Omar Duric BBA CIM DMS FMA Prtfli Manager HllisWealth INVESTMENT POLICY STATEMENT DISCRETIONARY PORTFOLIO MANAGEMENT

2 Investment Plicy Statement 1. Purpse f the Investment Plicy Statement (IPS) An Investment Plicy Statement (IPS) is written t prvide bth clarity and guidance in the investment decisin-making prcess ur team emplys and t utline the parameters and cnditins fr managing yur prtfli. The IPS prvides the fllwing: Summarizes the key investment plicy factrs relating t the management f yur prtfli Establishes an asset allcatin mdel that is designed t generate acceptable returns within the parameters f yur investment bjectives and risk tlerances Outlines rles, respnsibilities and expectatins f yurself and ur team Establishes a dcumented basis with which we may discuss the abve stated factrs Prvides a clear understanding and alignment between yurself and ur team as t yur bjectives, gals and restrictins with respect t the management f yur prtfli Outlines the parameters t be used fr adjustments in yur asset allcatin and security selectin due t changing financial markets and ecnmic cnditins A meaningful basis fr the evaluatin f the investment strategies and benchmarks used t achieve the investment bjectives 2. Client Prfile The develpment f yur IPS has been subject t the infrmatin yu have prvided in yur submitted persnal and financial prfile dcuments, alng with explratry discussins we cnducted during ur initial FIT meetings. The dcuments yu have prvided: New Client Applicatin Frm (NCAF) Intake Frm Risk Tlerance Questinnaire These dcuments and discussins have prvided ur team with understanding f yur: Investment Objectives Risk Tlerances Liquidity Requirements Investment Knwledge Tax Requirements Expectatins Unique Circumstances and Cnsideratins Time Hrizn 1

3 Investment Plicy Statement 3. Asset Management Philsphy Our asset management philsphy cmprises the building fr yu an verarching strategic framewrk and asset allcatin frm the fllwing client needs and investment paradigms: Knw Yur Client (KYC) - Careful examinatin f yu financial psitin, investment gals, liquidity requirements, incme requirements, tax cncerns, investment expectatins, and capacity and tlerance f risk are the guiding criteria frm which the strategic allcatin is frmulated and cnstraints established. Asset Allcatin and Sectr Rtatin Our gal is t achieve superir risk-adjusted returns thrugh an active asset management mdel that shifts assets and sectr allcatins within the cnstraints set by yur risk tlerance and investment bjectives. This can take the frm f increasing r reducing weightings at the asset and sectr level in line with ur frecasts within the permissible parameters f the agreed upn client mdel. Abslute and Risk-Adjusted Returns - Given ur tactical asset allcatin apprach, it is incumbent upn us t benchmark ur perfrmance against expected annual abslute return threshlds, nt lng-run averages. Mrever, these threshlds must be apprpriately set against what amunt f risk may be taken t deliver such returns. Yield Our general asset selectin will be biased twards assets that prduce distributable cash flws. This fllws an investment paradigm we espuse that regards the cmpunded yield prtin f asset returns as an integral driver f an asset s ttal return ver the medium t lng term. Mrever, recurring cash flws wrk t reduce vlatility f returns within the prtfli and are mre ften assciated with the investment entities that have greater financial capacity since they are able t sustain such distributins. Gegraphy - In the interest f familiarity, a bias twards Canadian dmiciled assets will be exhibited when apprpriate, such as in sectrs where ur ecnmy and capital markets basts cmparative advantages (i.e. Materials, Energy, and Financials) r the net benefit f freign investing may nt justify the varius risks given the return prfiles. Hwever, in ther asset classes and sectrs where the Canadian markets fferings are cmparatively weak, it is incumbent upn ur team t seek ut the pprtunities t ensure apprpriate expsure and diversificatin. Investment Vehicles - The chice f investment vehicles, be it pled assets r individual securities, passively r actively managed, is determined by the diversificatin requirements f the client. As a rule f thumb, we will be inclined t use pled assets fr prtflis under $250,000 and individual securities abve that value. Cncentratin It is the gal f ur team t ensure that n mre than 10% f any prtfli is cncentrated in any single individual security. T btain asset r sectr expsure beynd that percentage threshld, we will endeavr t use multiple individual securities and/r pled assets. 2

4 Investment Plicy Statement 4. Security Selectin Prcess We emply the fllwing tp-dwn apprach with respect t ur tactical asset allcatin weighting cnsideratins and chice f securities and sectrs within thse asset classes: Macrecnmic Cycles and Trends - We begin with frecasts fr ecnmic and asset perfrmance within the cntext f the varius cycles such as ecnmic mmentum, mnetary/credit plicy, business and cnsumer sentiment, and fiscal plicy. We als factr in geplitical and technlgies develpments t distinguish pssible secular trends that supersede regular macrecnmic cycles. Asset Class and Sectr Selectin - Within the cntext f such cyclical and secular trends, we determine which asset classes and gegraphies, and subsequently which asset class industries and sectrs, prvide the best investment dmains t verweight ur tactical allcatin given a client s investment cnstraints. Individual Asset Selectin - Within any asset class and sectr, the fllwing criteria are used t determine whether a security is attractive fr inclusin in the prtfli: Security s underlying entity is a ging cncern and has attractive fundamentals Security s underlying entity has ecnmic size, a strng balance sheet and credit prfile Security generates sufficient free cash flw that can maintain sustainable distributins r dividends Security s financial ratis and valuatin metrics are mre attractive relative t peers and are attractive within the cntext f their asset class r sectr s valuatins against their market averages r their evlutin within macrecnmic cycles r trends Psitin Entry and Exit - Technical analysis can be used t determine shrt term trading cnditins fr entry r exit f a psitin nce fundamental and quantitative analysis have determined a curse f actin: Buy discipline is adhered t by entering psitins at timely levels when emplying pled assets and individual securities Sell discipline is adhered t by existing psitins at timely levels when emplying pled assets and individual securities Stp Lss rders may be used as means f ensuring such discipline with exchange-listed securities When cnsidering a particular security s cntinued apprpriateness as vehicle fr a desired asset expsure, attentin will be paid t its relative valuatin and cncentratin within the prtfli 3

5 Investment Plicy Statement 5. Client Gals Client husehlds may have a variety f gals with respect t their wealth and the management f their investment prtfli, such as incme security, planned purchases, r estate transfer. Please kindly list what gals yu wish ur team t mind when managing yur prtfli: 6. Client Cnsideratins Client husehlds may have a variety f cnsideratins which wuld impact the management f their investment prtfli, such as tax cnsideratins, liquidity requirements, r investment preferences. Please kindly list what cnsideratin yu wish ur team t mind when managing yur prtfli: 7. Client Exceptins Client husehlds may have an aversin t particular investments, gegraphies, industries r strategies. Please kindly list what exceptins yu wish ur team t mind when managing yur prtfli: 4

6 Investment Plicy Statement 8. Asset Allcatin Mdels The fllwing asset allcatin mdels frm the basis fr the agreed upn parameters fr the discretinary investment management f yur prtfli. Each mdel s allcatin percentages represent the maximum allwable fr grwth assets, such as equities r cmmdities, and the minimum allwable fr fixed incme assets, such as cash r bnds. Aggressive Grwth This is an asset allcatin mdel that can weigh yur prtfli entirely twards capital appreciatin and requires the highest risk tlerance and aggressive grwth investment bjectives. Grwth This is an asset allcatin mdel that can weigh yur prtfli twards capital appreciatin and requires a medium/ high risk tlerance and grwth/aggressive grwth investment bjectives. Balanced This is an asset allcatin mdel that can strike a balance f capital appreciatin and incme and requires primarily a medium risk tlerance and grwth investment bjectives. Cnservative This is an asset allcatin mdel that weighs yur prtfli twards incme with rm fr sme capital appreciatin and it requires a medium risk tlerance and incme/grwth investment bjectives. Defensive This is an asset allcatin mdel that weighs yur prtfli twards incme and capital preservatin and requires a lw risk tlerance and incme investment bjectives. Fr specific asset categry, risk ratings, and maximum weightings please nte the table utlined in Schedule 1 f the Addendum. 5

7 Investment Plicy Statement 9. Decisin Making Investment decisins will be made by ur team n a discretinary basis and must be within the parameters f yur investr prfile, the asset allcatin mdel and the investment guidelines set ut in this Investment Plicy Statement and supprting dcumentatin. Any alteratins t the asset allcatin mdel must be agreed t by bth parties, in writing, prir t implementatin. 10. Client Respnsibility T ensure that ur team cntinues t meet yur nging wealth management needs, it is imprtant that yu infrm us f any material changes in yur needs and bjectives in a timely manner. It is imprtant fr yu t review yur statements and cmmunicate with us regarding any questins r cncerns. 11. Reprting Yu will receive quarterly statements which will detail hldings, activity, asset mix, and perfrmance within the accunts. In additin, yu will receive transactin cnfirmatins fr each trade executed in yur accunt. If yu d nt wish t receive these transactin cnfirmatins we can suppress them fr yu. We will meet fr a cmprehensive review at least nce a year t present a prtfli reprt and review yur IPS t ensure that it still reflects apprpriately yur needs and bjectives. Shuld yu wish t schedule a meeting r cntact ur team, yu may d s at yur cnvenience. 12. Reviews There will be regular reviews scheduled with yu t discuss yur accunts and review yur current status. These reviews may be cnducted in persn r via a scheduled telephne and telecnference appintment. Please indicate yur preferred frequency fr such reviews belw: 13. Prfessinal Standards Quarterly Semi-Annually Annually All investment activities will be cnducted in accrdance with IIROC and with further crprate plicies f HllisWealth and Sctia Capital Inc. 14. Terminatin f Service The term f this engagement shall cntinue until such time as ntificatin is prvided by either party and may be terminated at any time with 30 days written ntice. Fees will be assessed n a pr-rated basis in accrdance with the rates detailed in the Investment Management Agreement. 6

8 Investment Plicy Statement 15. Acknwledgement and Acceptance Please sign this statement t cnfirm yur agreement with yur recmmended asset allcatin mdel and the guidelines fr structuring yur investment prtfli. Further, it is mutually understd that this agreement is subject t the terms and cnditins cntained in ther pertinent dcumentatin frm HllisWealth such as the New Client Applicatin Frm (NCAF) and Investment Management Agreement (IMA). Client Signature Client Name Date Client Signature Client Name Date Paul Shiptn CIM Prtfli Manager HllisWealth Date Omar Duric BBA CIM DMS FMA Prtfli Manager HllisWealth Date HllisWealth is a divisin f Sctia Capital Inc., a member f the Canadian Investr Prtectin Fund and the Investment Industry Regulatry Organizatin f Canada. Trademark f The Bank f Nva Sctia, used under license. 7