Global Diversified ETF Fund

Transcription

1 Global Diversified ETF Fund

2 A Montreal-based investment firm founded in 2014 and registered by the Autorité des Marchés Financiers (AMF). Assets under management of approx. $600 million in various sub-advisory roles. Distinguishing attributes: Experienced portfolio management team (60+ years) Portfolio construction using ETFs exclusively Active management with risk-focussed investment philosophy Solely servicing the institutional / sub-advisory market Robot efficiency with a human touch Client-centric model that only a boutique can provide 2

3 Management Team Michel Falk, MBA, CFA 35 years of financial markets experience. Senior management positions at major financial institutions, including: Head of National Bank Financial s PM Department. CIO of Natcan Investment Management. President and CEO of National Bank Investment. MBA and CFA charterholder. Ralph Hartmann, MBA, CFA 30 years of financial markets experience. Multi-national experience in New York, Paris and Brussels. Almost 20 years of portfolio management experience, most recently as Senior PM with National Bank Private Wealth MBA and CFA charterholder. 3

4 A Risk-Focused Investment Philosophy Risk management is central to FNB Capital s investment philosophy, a perfect match for the goal of optimizing risk-adjusted returns. Beyond investment philosophy, risk management permeates throughout FNB Capital s 5-step investment process. FNB Capital possess a full inventory of risk management tools: 1. In-house database and software permits look-through to underlying primary risk factors 2. Results feed to risk management dashboard 3. Back-testing models to validate portfolio robustness 4

5 A Summary of FNB Capital s 5-Step Investment Process Generation of investment map, combining investment themes with asset class fundamentals. Asset allocation using core and satellite structure, using both passive beta and active alpha. Disciplined ETF selection, filtering down to the best based on evaluation grid. Portfolio construction tailored to client guidelines achieving robust low-cost solutions. Portfolio monitoring / strategy re-evaluation: continuous (daily) process but no short-term trading. Common to all: looking at risk factors at every step of the way. 5

6 Why Investing is Hard The top-performing asset class from one year is often be the worst the following year. Patterns appears random and history has shown that predicting next year s winner is a losing proposition. Annual Returns of Key Assets (CAD) Best % 18.6% 31.1% 52.0% 17.6% 9.7% 16.0% 41.3% 23.9% 21.6% 21.1% 28.7% 26.4% 9.8% 6.4% 35.1% 13.0% 8.3% 15.3% 31.6% 11.0% 19.5% 14.2% 17.4% 17.3% 4.4% 3.3% 31.0% 9.1% 8.1% 13.4% 14.8% 10.6% 16.2% 8.1% 13.8% 15.4% 3.7% -7.7% 12.5% 8.5% 4.6% 12.2% 13.0% 9.7% 14.0% 7.7% 9.8% 11.5% -5.3% -21.2% 7.4% 6.7% 1.0% 7.2% 4.3% 8.8% 3.5% 1.7% 2.5% 6.2% -7.2% -28.8% 5.4% 2.6% -8.7% 3.6% 3.9% 7.0% 2.4% 0.5% 0.6% 4.1% -10.5% -33.0% 0.6% 0.5% -9.6% 2.0% 1.0% 4.1% 0.6% -1.5% 0.3% Worst 4.0% -12.9% -41.4% -9.2% 0.0% -16.2% 1.0% -1.2% 0.9% -8.3% -2.0% 0.0% Source: FNB Capital and Morningstar Research Inc. 6

7 The Result Investors inevitably chase results as it feels good to buy what has done well. Following the herd ensures buying high and selling low, never a good investment strategy. This human behavior best explains why investors returns are almost always below that of any strategy, even when it has been successful. Almost Everyone is a Trend Chasers! Source: Timing Poorly: A Guide to Generating Poor Returns While Investing in Successful Strategies, Journal of Portfolio Management (Winter 2016) Hsu, Myers, and Whitby 7

8 The Solution Borrow solutions from some of the best money managers in the world with the goal of bringing institutional-style portfolio management to individual investors. To maximize the odds of sticking with the strategy, create a dual mandate that includes both attractive returns with low volatility. Construct the solution with diversification as the key ingredient. Ensure diversification is achieved across multiple dimensions including asset class, geography and investment style. Place risk management at the forefront of the investment process. Exclusively use exchange traded funds (ETFs) for their multitude of advantages, especially low cost and transparency. 8

9 The Global Diversified ETF Fund Description: Intended for investors seeking long-term capital appreciation. A target asset allocation of 60% equity / 40% fixed income, providing long-term growth in a low-to-moderate risk package. Portfolio holds ETFs exclusively. Although not a specific goal, the fund will generate income in line with the major indexes. Dual Investment Mandate: 1. Seek to provide attractive long-term returns. 2. Seek to produce the lowest amount of volatility possible. 9

10 Bringing Diversification to a Whole New Level The Fund will be diversified across both traditional and non-traditional asset classes: Fixed income Equities Alternatives (commodities / real assets / hedge funds) The Fund will be diversified geographically: A healthy mix of domestic (Canadian), U.S., and international assets The Fund will be diversified across numerous investment strategies: Currency-hedged strategies Traditional value / growth strategies Next generation factor ( smart beta ) strategies 10

11 The Goal A balanced approach that strives for consistency across time (see black boxes below). An evidenced-based solution that maximizes the power of diversification. Annual Returns of Key Assets (CAD) Best % 18.6% 31.1% 52.0% 17.6% 9.7% 16.0% 41.3% 23.9% 21.6% 21.1% 28.7% 26.4% 9.8% 6.4% 35.1% 13.0% 8.3% 15.3% 31.6% 11.5% 19.5% 14.2% 17.4% 17.3% 4.4% 3.3% 31.0% 8.9% 8.1% 13.4% 15.3% 11.0% 16.2% 8.1% 13.8% 15.4% 3.7% -7.7% 13.6% 9.1% 4.6% 12.2% 14.8% 10.6% 14.0% 7.7% 9.8% 13.0% 0.3% -15.8% 12.5% 8.5% 1.0% 8.3% 13.0% 9.7% 6.8.% 6.5% 8.4% 11.5% -5.3% -21.2% 7.4% 6.7% 0.7% 7.2% 4.3% 8.8% 3.5% 1.7% 2.5% 6.2% -7.2% -28.8% 5.4% 2.6% -8.7% 3.6% 3.9% 7.0% 2.4% 0.5% 0.6% 4.1% -10.5% -33.0% 0.6% 0.5% -9.6% 2.0% 1.0% 4.1% 0.6% -1.5% 0.3% Worst 4.0% -12.9% -41.4% -9.2% 0.0% -16.2% 1.0% -1.2% 0.9% -8.3% -2.0% 0.0% : 40% FTSE/TMX Universe Bond, 40% MSCI World, 20% S&P/TSX Source: FNB Capital and Morningstar Research Inc. 11

12 A Word on Tactical Asset Allocation For our risk-driven approach, tactical asset allocation (TAA) is the icing on the cake. Although we are the first to admit that short-term forecasts are next to worthless, we also believe that TAA can add value over longer-term time frames. TAA allows us to: Capitalize on market opportunities Protect the portfolio from identifiable risks Different assets classes, geographical regions or factors will vary in price over time. The ability to tilt portfolios towards the cheap and away from the expensive can help smooth the ride. 12

13 Summary of the Global Diversified ETF Fund As a fully-diversified global portfolio, the Global Diversified ETF Fund can serve as both a stand-alone product or as an efficient core in a multi-manager core & explore strategy. Portfolio construction inspired by some of world s top institutional money managers. The exclusive use of ETF s keeps the solution both simple and sophisticated. Brings diversification to a whole new level by including alternatives and by diversifying across investment strategies. Complete independence and open-architecture gives FNB Capital the flexibility to choose the best-available ETFs. 13

14 Do You Really Need ETF Specialist? Although ETFs may have lessoned the needs of finding a good stock picker, no one ever said constructing portfolios with different assets was any easier. The multitude of ETF benefits (instant diversification, transparency, cost, ease-ofuse) has to an extent made them a victim of their own success. Along with the number of ETFs available (more than 2,500 in North America alone), their complexities under the hood have likewise exploded exponentially. In today s ETF jungle, it makes sense to deal with a specialist for your ETF solutions. With FNB Capital, ETFs are all that we do (it s in our name, with FNB being the French acronym for ETF). 14