Advisor Guide FOR ADVISOR USE ONLY NOT FOR DISTRIBUTION TO CLIENTS

Transcription

1 Advisor Guide FOR ADVISOR USE ONLY NOT FOR DISTRIBUTION TO CLIENTS

2

3 Managed solutions can provide many benefits to your practice. Their convenience allows you to shift your time from portfolio construction to focus on other client services and business-building efforts. But not all managed solutions are alike. With Portfolio Select Series, you can have confidence that you are providing a sophisticated, high-quality investment program to your clients, while maintaining the flexibility and ease of use you require. Portfolio Select Series Best Fund of Funds program Morningstar Awards 2013 Winner

4 Portfolio Select Series Portfolio Select Series consists of four underlying pools that are used to construct nine efficient portfolios.* The program is backed by two levels of expertise: Strategic asset allocation CI Investment Consulting combines its portfolio construction expertise with comprehensive research and recommendations from State Street Global Advisors, a world leader in asset allocation, to create the portfolios. This research goes beyond historical returns to embrace a forward-looking framework. Tactical portfolio management Portfolio Select Series offers your clients the expertise of award-winning portfolio managers with proven track records, including Cambridge Global Asset Management, Harbour Advisors and Signature Global Asset Management. These managers, through their specialized mandates, have the discretion and opportunities to add value using day-to-day tactical actions through stock selection and sector allocation. This expertise is combined with other leading features, making it applicable for all account types, especially non-registered accounts, given the tax efficiency of the CI Corporate Class structure and the flexibility to easily customize a portfolio to meet different needs. Portfolio Select Series offers a questionnaire and the ability to generate investment policy statements so that you can present your clients with a complete investment solution. All of these features are supported by convenient online tools. * The portfolios may also invest in other CI mutual funds to enhance portfolio efficiency. 4 Portfolio Select Series

5 Portfolios built to add value Diversified portfolios strategically engineered for efficiency by maximizing return for a given level of risk. Each portfolio is constructed to suit client needs for capital preservation, income generation and long-term growth. Nine style-neutral portfolios to meet every client risk level. Portfolios are based on four underlying multi-manager, institutional-style pools, exclusive to Portfolio Select Series, as well as other CI mutual funds as required. Managed by award-winning in-house and outside managers, selected for their area of expertise. Enhanced after-tax returns with CI Investments Corporate Class structure. Ability to receive tax-efficient payments and minimize taxes. Each managed portfolio is available in T-Class, for clients seeking a tax-efficient income stream. Flexible options that allow you to customize. Add value by introducing your own style or sector allocation. Portfolio Select Series 5

6 It starts with comprehensive research from State Street Global Advisors CI Investment Consulting uses asset mix research and recommendations from State Street Global Advisors and its Investment Solutions Group to help craft Portfolio Select Series efficient strategic asset allocation portfolios. State Street stays on top of more than 100 global markets With US$2.2 trillion * in assets under management, 27 offices worldwide and more than 2,500 employees, State Street Global Advisors is one of the largest investment management companies in the world and operates in more than 100 global markets. * As at December 31, Asset allocation specialists State Street Global Advisors Investment Solutions Group consists of 70 investment professionals with multi-asset class experience managing billions in global asset allocation assets. The group, supported by currency specialists and economists, analyzes each asset class from both a top-down perspective (economic variables, trends, historical relationships) and from a bottom-up perspective (fundamental variables). Factors such as interest rates, inflation, and productivity are analyzed to form expectations for future economic growth of various countries. This information helps to shape expectations of companies earnings growth and valuations to calculate anticipated returns. 6 Portfolio Select Series

7 The value of State Street s strategic asset allocations Forecasting risk, return and correlation As asset allocation specialists, State Street Global Advisors uses a mean-variance optimization framework to calculate portfolio mixes that offer the highest return for each level of risk. The key inputs into this process are State Street Global Advisors proprietary long-term asset class forecasts for risk, return and correlation. Their risk and correlation estimates rely heavily on analyzing historical data, spanning numerous market environments. Historical findings and relationships are further adjusted for any sustainable changes observed within current market environments in order to establish a forward-looking assessment. For example, the correlation between U.S. equity and international equity markets has been adjusted upwards relative to historical data to reflect the effects of globalization across markets. Finally, State Street Global Advisors forward-looking total return estimates are generated through a combined assessment of current valuation measures, corporate earnings, economic growth, inflation forecasts, and historical risk premiums for the various asset classes. This research forms the basis for the construction of the portfolios within Portfolio Select Series. Portfolio Select Series 7

8 CI Investment Consulting puts it all together CI Investment Consulting is an in-house group of professionals who have played an active role in the design and management of the Portfolio Select Series program since its inception. The team is responsible for ongoing due diligence and overall program maintenance. Our proprietary program for the selection and monitoring of managers, as well as the team s portfolio-building techniques, incorporate a best practices approach to ensure the managers adhere to their investment mandates over time. CI Investment Consulting s rigorous process is comparable to those used by Canada s top consulting firms for large institutional investors. The team oversees more than $30 billion of assets in various managed solution programs for clients of CI Investments. Building the Portfolio Select Series portfolios Our philosophy of portfolio construction is driven by the belief that asset allocations should be strategic and forward looking. This provides opportunities to capture maximum return for a given level of risk, and recognizes that investment opportunities and risks change over time. Also, each asset class should be diversified by style so that returns are not dependent on one investment approach. Finally, portfolio managers should be selected because they are the best suited for that asset class style. How do we design the program to get these results? Draw on comprehensive index-based research and recommendations from State Street Global Advisors to set asset mixes. Review State Street Global Advisors recommendations to see if any adjustments to the asset allocations are required so there are no unintended duplications between managers, or inappropriate sector, country or currency exposures. Carefully select each manager using our proprietary program, based on: 1. Proven philosophy and process. 2. Resources that include team dynamics and experience. 3. Historical track record. 4. How they complement each other and add value to the overall program. Favour managers who excel at security selection and are not afraid to differentiate their porfolios from the benchmark index. Give managers of each mandate discretion to create their own portfolio that may be concentrated and benchmark agnostic, attributes that we believe add value. Capital Markets Research Asset Allocation Portfolio Strategy Manager Selection Implementation/ Trading Review and Control 8 Portfolio Select Series

9 CI Investment Consulting keeps it on track Our work doesn t end with building the portfolios and hiring quality portfolio managers. To ensure Portfolio Select Series continues to perform as intended, CI Investment Consulting manages the program on an ongoing basis. The CI Investment Consulting team: Using ongoing research and recommendations from State Street Global Advisors, reviews assumptions of the asset mixes, including volatility and expected returns, and makes adjustments as needed to ensure the portfolios continue to be efficient and forward looking to capture maximum return for a given level of risk. Meets every two weeks to discuss any major changes in portfolio positioning or holdings. Meets at least twice a year with the portfolio managers to review and discuss the portfolio and its positioning. Provides top-level risk management overlays, such as currency management. Regularly monitors the composition of the holdings for any unintended sector, style or currency exposure. Uses a wide range of attribution tools to analyze performance of each fund and manager on a quarterly basis, and compares performance of the managers to their peers and benchmarks. Portfolio Select Series 9

10 Nine strategic asset allocation portfolios Optimizing returns Each of the nine portfolios, ranging from 100% income to 100% equity, is designed to maximize returns for its level of risk using sophisticated optimization methods. Each portfolio consists of a mix of each of the four broad asset classes: income, Canadian equity, U.S. equity and international equity. Please see the latest annual Portfolio Select Series Outlook and Target Allocations document for details on the current asset mixes. 50i50e 40i60e 30i70e 20i80e 100e 60i40e 70i30e Return 100% income * 80i20e Volatility Income Canadian Equity U.S. Equity International Equity * Available as Select Income Managed Corporate Class. 10 Portfolio Select Series

11 Four multi-manager institutional-style pools Income pool: Objectives and strategies The income pool is designed to generate income and some capital growth to protect wealth from inflation, and to reduce volatility driven by the equity portion of the portfolio. Historically, fixed-income investments have low correlation to the equity markets. They also tend to perform well when equity market prices decline. The asset mix of the income pool is actively managed, based on outlook and valuations with the following parameters: 30%-70% Canadian government bonds and investment-grade corporate bonds. 20%-50% high-yield corporate bonds and highyielding dividend stocks Equity pools: Objectives and strategies The equity pools are crafted to deliver attractive longterm growth by investing in high-quality companies. They employ a blend of investment styles, including value and growth. Also, a portion is allocated to portfolio managers that have the discretion to shift away from benchmark-like portfolios, and to create more concentrated collections of securities, providing even more diversification and opportunities for growth. The portfolio managers focus on a bottom-up approach, selecting stocks based on the individual growth or value attributes of companies. They select companies that are expected to deliver strong returns and/or lower volatility than the overall market. 0%-30% global government bonds, which may include emerging countries. Portfolio Select Series 11

12 The three equity pools Canadian equity pool Invested mainly in large-cap Canadian equities. Small-cap exposure between 10% and 25%. It may have exposure to foreign companies which will generally be less than 10%, with currency hedging used to reduce currency risk. U.S. equity pool Exclusively invested in U.S. equities, mainly large caps. Small-cap exposure between 10% and 25%. Currency hedging employs mean-reversion model to manage U.S. dollar exposure, with varying hedge ratios depending on exchange rate. For example, if the Canadian is dollar trading at greater than 90 U.S. cents and less than parity, the hedge ratio is 30%. International equity pool Majority of assets invested in the MSCI EAFE Index universe. Exposure to emerging markets such as China, South Korea, Taiwan, India and Russia expected to range from 10% to 30%. May hold a small allocation to small caps. Most currencies lack a repeatable pattern relative to the Canadian dollar against which to apply a meanreversion model, so for three major currencies the euro, British pound and Japanese yen we use a long-term hedging target of 50%. 12 Portfolio Select Series

13 The value of great managers We use in-house and external managers based on their proven track record in their areas of expertise. Our managers are the recipients of 54 Lipper Fund Awards since 2007, 112 FundGrade A+ Awards and 34 Morningstar Awards in the past 10 years. Our Morningstar Awards include: Best Fund of Funds program for Portfolio Select Series in 2013, and for Portfolio Series in 2011 and Morningstar Fund Manager of the Decade (2010) and Morningstar Equity Fund Manager of the Year (2009) for Eric Bushell, Chief Investment Officer of Signature Global Asset Management. Morningstar Foreign Equity Fund Manager of the Year in 2015 for Richard Jenkins, Managing Director and Portfolio Manager with Black Creek Investment Management. Breakout Fund Manager of the Year in 2015 for Greg Dean and Stephen Groff, Principals and Portfolio Managers with Cambridge Global Asset Management. Portfolio Select Series 13

14 Enhanced tax efficiency Portfolio Select Series is based on CI Corporate Class, which offers the following tax benefits for non-registered accounts: The low dividend payout policy. Capital losses from some corporate class funds may offset gains in other funds in the structure. Tax-efficient income. Corporate class dividends are in the form of Canadian and capital gains dividends currently the most tax-efficient sources of income. This is the case regardless of investment mandate. The ability to generate tax-efficient cash flow through T-Class funds. T-Class offers investors the ability to access cash flow from Corporate Class as a return of capital. The benefit to all Corporate Class investors of aggregating expenses for all investment mandates across one corporate structure. These expenses will effectively reduce interest income and foreign dividends within the structure. 14 Portfolio Select Series

15 T-Class: Tax-efficient monthly cash flow T-Class is a tax-efficient solution from CI Investments that creates a customized stream of predictable taxdeferred cash flow, without sacrificing a choice of investments. T-Class can provide more after-tax cash flow than conventional systematic withdrawal plans and at no additional cost. T-Class is built on CI s Corporate Class structure, which means that the monthly distributions will be tax-efficient, unlike some other T series funds that are based on mutual fund trusts where a large portion of the distribution can be highly taxed interest. No longer are your clients confined to traditional fixedincome products to fill their income needs. By using T-Class, your clients can: Choose from any of the nine Portfolio Select Series portfolios. Create a predictable, tax-effective stream of monthly cash flow to meet their needs without sacrificing the potential for growth. Allow their investments to continue growing at rates that can potentially match, or outstrip the rate of withdrawal. Customize monthly payments by selecting a dollar amount or a percentage up to 8%. For more information, visit Portfolio Select Series 15

16 Two approaches including the flexibility to customize One of the advantages of Portfolio Select Series is having two approaches within one program, giving you the flexibility to meet the needs of any client. 1. Managed Portfolios offers simplicity for you and your client Managed Portfolios allows you the choice of nine efficient portfolios ranging from 100% income to 100% equity. With Managed Portfolios, you can be confident that your clients are benefiting from a sophisticated and complete investment solution, carefully crafted to suit their individual requirements, and offering you: Peace of mind rely on the expertise of State Street Global Advisors and CI Investments for portfolio construction. Convenience simple to administer with one fund code to purchase/redeem. 2. Custom Accounts add your own value Custom Accounts lets you add your value through easy customization. You choose one of the nine portfolios as a starting point, and customize it by changing the mix of Corporate Class funds. This is ideal when you and your clients want to meet unique needs by: Emphasizing a particular equity management style (Style Review). Focusing on a particular sector or region (Active Strategy). Selecting your own rebalancing targets and timelines. The online Portfolio Builder software tool ensures the portfolio remains efficient. 16 Portfolio Select Series

17 Custom Accounts: Add your own value The process: Whether you choose to make changes to the overall asset class weightings by adding funds to the chosen portfolio (Active Strategy) or substitute a position of any Select fund with funds in the same asset class (Style Review), the Portfolio Builder software provides risk management tools that will guide you through the customization process to ensure that the Style Review and any Active Strategies are an integral part of the optimal portfolio. This software is available to you by visiting the Online Tools section of the Portfolio Select Series website at Choose from among more than 50 CI Corporate Class funds. The allocation changes or substitutions may not exceed 30% of the chosen portfolio, as research shows that this level of adjustment should not change its risk profile in a significant way. Example of a custom portfolio emphasizing particular styles and sectors. Portfolio Select Series Builder Optimized 100e Portfolio Choice of more than 50 CI Corporate Class Funds Optimal Tailored Solution Select Canadian Equity Managed Corporate Class Select U.S. Equity Managed Corporate Class Select International Equity Managed Corporate Class Select Canadian Equity Managed Corporate Class Select U.S. Equity Managed Corporate Class Select International Equity Managed Corporate Class Signature Global Energy Corporate Class Cambridge American Equity Corporate Class Harbour Corporate Class Portfolio Select Series 17

18 The Portfolio Select Series Process Implement Identify Your Client s Investment Objectives Select Portfolio Optional Customization IPS and Conduct Purchase Monitor Progress Consider your clients investment objectives, risk tolerance and investment horizon to determine the portfolio that fits them best. Determine which of the nine portfolios is appropriate for your client. Add your own value by customizing to meet your client s particular needs. Generate Investment Policy Statement to reflect client s profile and choices. Submit order to CI Investments. Managed Portfolios Automatically rebalanced Custom Accounts Optional rebalancing All clients receive personalized quarterly statements. Portfolio Review published quarterly. Portfolio Select Series: Highlights and quick facts Portfolio Select Series portfolios built to add value Strategic asset allocation, annual review Investment managers with proven expertise Enhanced tax efficiency Add your own value through customizable portfolios Available in Class A (ISC, DSC and LL), F and W Available in CI Private Investment Management (Class E, O, EF) for higher net worth investors Rebalance your portfolio to keep it on track 5% threshold or set your own Quarterly client reporting Detailed quarterly Portfolio Review available online Create a stream of predictable tax-deferred income through T-Class Website: 18 Portfolio Select Series

19

20 For more information on Portfolio Select Series, please contact your CI Sales Representative or visit FOR DEALER USE ONLY NOT FOR DISTRIBUTION TO CLIENTS Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. CI Investments, the CI Investments design, Cambridge, Harbour Advisors and Harbour Funds are registered trademarks of CI Investments Inc. Portfolio Select Series, the Portfolio Select Series design and Signature Global Asset Management are trademarks of CI Investments Inc. Lipper Fund Awards are given by Lipper, Inc. to recognize funds that have provided superior consistency and risk-adjusted returns when compared to a group of similar funds. Awards are given to the fund with the highest value within its category for the time periods of three, five and 10 years according to the Lipper Leader ratings for Consistent Return, which reflect funds¹ historic returns, adjusted for volatility, relative to peers. Lipper Leader ratings change monthly. For more information, see lipperweb.com. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Lipper ratings and Lipper Fund Awards are not intended to predict future results. This does not constitute and is not intended to constitute investment advice or an offer to sell or buy securities. The Lipper Fund Awards are part of the Thomson Reuters Awards for Excellence, a global family of awards that celebrate exceptional performance throughout the professional investment community. For more information, visit excellence. thomsonreuters.com. Thomson Reuters Copyright 2014, All Rights Reserved. The FundGrade A+ rating is used with permission from Fundata Canada Inc., all rights reserved. The FundGrade A+ calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The funds with the highest 10% receive a grade of A, the next 20% a grade of B, the middle 40% a grade of C, the next 20% a grade of D, and the lowest 10% a grade of E. Eligible funds must have received a FundGrade rating every month in the previous year. The FundGrade A+ uses a GPA-style calculation, where each monthly FundGrade from A to E receives a score from 4 to 0, respectively. A fund s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded an A+ rating. For more information, see Morningstar Awards. Morningstar Inc. All Rights Reserved. 2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I Head Office / Toronto Calgary Montreal Vancouver Client Services English: French: _E (6/16)