U.S. PADIS PORTFOLIO. September 2018

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1 U.S. PADIS PORTFOLIO September 2018

2 Portfolio Advised Disciplined Investment Strategies

3 OVERVIEW FIRM Echelon Wealth Partners is a full service independent Canadian based brokerage house with offices in Toronto, Montreal and across Canada. Fidelity acts as their custodian and clearing agents. $4.5 Billion in Assets Under Managements with over 80 Investment Advisors. CAPABILITIES Portfolio Management Capital Markets Equity Research FX Strategies Cash Management Financial Planning Insurance EXPERIENCED TEAM As part of the retail division, the PADIS team of portfolio managers have almost 40 years of combined experience in the industry.

4 EXECUTIVE SUMMARY PADIS ROOTS Passive investment strategies have experienced widespread adoption over the years with their inflows now dwarfing many active strategies. This increase in size has allowed for the costs associated with these strategies to continually drop, but it has also magnified other problems such as the herd instinct amplifying losses when the markets are falling. Recognizing this problem and other emotional based investing biases, over 5 years ago we began looking for a solution and thus began the PADIS Portfolios. The solution stems from rigorous research as to which factors and attributes are found in companies with the potential to outperform and from which can be built a better portfolio. These portfolios protect clients from large drawdowns while still generating strong performance over a complete business cycle. In the following pages we explain in detail our investment process and the factors used in managing client portfolios.

5 EXECUTIVE SUMMARY PADIS The U.S. PADIS Portfolio is a concentrated multifactor model that consists of names. It contains large cap companies focused on generating growth for investors. It is a rules based portfolio to ensure the strictest form of investing using quality, momentum & value factors. While the portfolio is built to participate in a rising market, it will do so with less upside in a period of strong rebound, but will increase protection on the downside, with the goal of beating its benchmark over the long term with less volatility. The PADIS portfolios began with a total of $5 million 4 years ago and has since grown to over $50 million. Both portfolio manager and client interests are aligned through a performance based fee structure.

6 PROFESSIONALS THIERRY TREMBLAY, MBA Vice President, Portfolio Manager Education: MBA Corporate Finance from UQAM Experience: Over 17 years experience in the financial services Macro analysis, business analysis & valuation, portfolio modeling, and Fx strategies are Thierry s fields of expertise. NICK SHINDER, CIM Vice President, Portfolio Manager Education: Chartered Investment Manager Designation & B.Com in Accounting from Concordia Three Main Specialties: Tax reduction, debt strategy & multi-disciplinary investing

7 The Shinder Tremblay Group currently has $200 million in Assets under Management (including the PADIS strategies) on behalf of high net worth individuals, family offices and corporations.

8 INVESTMENT PHILOSOPHY Concentration Low Correlation to the Index Balance Between Quality and Value. Disciplined Process A multifactor approach based on a certain set of rules. It allows us to consider a broad range of companies and filter them out according to the individual factors and rules that we deem essential to create a profitable investment while lowering risk. Our goal is not to make the investor the most money possible, it is to protect the investor in the event of down markets while continuing to profit in up markets. One of the ways this is accomplished is through a high active share portfolios. The model aims to combine companies that have value and strong growth. Systematic approach using a set of specific rules and objectives to make sure the pitfalls of cognitive biases are avoided.

9 OUR PROCESS OUR PROCESS STYLE FACTORS Style Factors 1 Quality Value Momentum Style factors have been chosen through extensive research backdating to Screening & Ranking 2 Quality (33.33%) Momentum (33.33%) High Conviction Portfolio 3 Value (33.33%) *Numbers have been rounded*

10 OUR PROCESS OUR PROCESS Style Factors 1 S&P 500 Universe SCREENING & RANKING Screening & Ranking 2 We begin with a Universe of 500 U.S. Public Companies. We then select the companies with the highest rating (score). High Conviction Portfolio 3

11 SCREENING & RANKING QVM Ranking Ranking Company Rating 1 Company A 5 2 Company B 7 3 Company C 8 4 Company D 10 BUY RULES Only the top companies according to QVM factors will be considered for their positions in the portfolio. TRIMMING RULES If the company s weight in the portfolio rises above 1, the position is trimmed down. SELL RULES If a company s ranking falls below the 5 th decile, it will be removed from the portfolio. 5 Company E 10 6 Company F 11 7 Company G 11 8 Company H 11 9 Company I Company J Company K Company L Company M Company N Company O Company P Company Q Company R Company S Company T Company U Company V Company W Company X 37 Example 25 Company Y Company Z Company AA Company AB Company AC Company AD 45

12 OUR PROCESS OUR PROCESS Style Factors 1 HIGH CONVICTION PORTFOLIO Screening & Ranking 2 Companies ranked highest are then added to create a high conviction portfolio. High Conviction Portfolio 3

13 TOP TEN HOLDINGS* Company Sector Allocation Cash 7.15% NetApp Inc. Information Technology 5. Biogen Inc. Health Care 4.4 United Health Group Health Care 4.36% Micron Tech Inc. Information Technology 4.32% Costco Wholesale Consumer Staples 4.21% Clorox Co. Consumer Staples 4.16% Procter & Gamble Co. Consumer Staples 4.09% Hershey Co. Consumer Staples 4.03% Johnson Controls Inc. Industrials 4.0 Paychex Inc. Information Technology 3.97% TOTAL FOR TOP % Remaining Positions 57.12% *As at August 31 st 2018

14 SECTOR ALLOCATION* U.S. PADIS SPDR S&P 500 ETF Consumer Discretionary Industrials Financials Consumer Staples Materials Information Technology Real Estate Telecom. Services Energy Utilities Health Care Minimum 3.42% 2.47% 2.71% 1.92% 2.85% 11.11% 12.98% 7.31% 9.62% % 20.26% 26.46% 31.81% 5.85% 14.54% 18.94% Maximum *As at August 31 st 2018

15 PORTFOLIO STATISTICS GROWTH OF $10,000 (Since inception vs. the SPDR S&P 500 ETF) Source: SIA charts *Returns are pre-fees

16 SUMMARY 1. EXPERIENCED TEAM 2. DISCIPLINED AND REPEATABLE INVESTMENT PROCESS 3. STRONG PERFORMANCE SINCE INCEPTION 4. LOWER VOLATILITY STRATEGY* 5. LOW CORRELATION TO THE BENCHMARK *As of august 31 st 2018, measured using beta and standard deviation compared to the SPY All icons designed by flaticon.com

17 CONTACT COMPARISONS INFO (AS AT APRIL 30 TH 2018) If you would like more information, please feel free to contact us: Thierry Tremblay: Phone: (514) Linked: : Nick Shinder: nshinder@echelonpartners.com Phone: (514) LinkedIn : Or visit our website at: shindertremblay.ca SHINDERTREMBLAY.CA Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This newsletter is solely the work of Nick Shinder and Thierry Tremblay for the private information of their clients. Although the author is a registered Investment Advisor with Echelon Wealth Partners Inc. ( Echelon ) this is not an official publication of Echelon, and the author is not an Echelon research analyst. The views (including any recommendations) expressed in this newsletter are those of the author alone, and are not necessarily those of, Echelon. Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.