Alpha investing the quest for exceptional performance

Transcription

1 Alpha investing the quest for exceptional performance The focus on absolute returns, management expertise unleashed United Financial focuses on partnering with investment managers who add value beyond the indexes, and we take it a step further by offering a truly distinct alternative known as alpha investing. Alpha refers to returns greater than what the benchmark index provides. Our alpha mandates are concentrated portfolios of selected investment managers very best ideas. These mandates cover Canadian, U.S. and international equities, and have been crafted to maximize risk-adjusted performance. What are our alpha mandates? Concentrated portfolios Our alpha managers create concentrated portfolios of stocks of approximately 20 to 60 quality companies, selected for their attractive valuation and/or growth prospects. Characteristics unlike the index The managers ignore the benchmark index when they construct their portfolios. Sector exposure and other characteristics of the alpha mandates can be very different from the index, and because of this, the difference between the performance of the alpha mandates and the benchmark could be significant, both in the short and long term. Potential to enhance performance and reduce risk The appeal of alpha investing is its potential to enhance the performance of your portfolio. While the managers may take on different risk than the benchmark and their performance may vary significantly from the benchmark index, they will be reducing the absolute risk of their portfolios by buying a very select group of what they determine to be attractively valued companies with excellent upside potential. This means that the alpha mandates may be appropriate as part of, or as a replacement for, your core equity holdings.

2 United Canadian Equity Alpha Joe Jugovic on the Canadian alpha mandate: This is a unique portfolio offering medium risk with concentrated positions in Canadian companies that we have a lot of confidence in because of their strong management and their attractive valuations. We re buying high-quality businesses when they are on sale and offer us a good opportunity. Since its launch in September 2008, United Canadian Equity Alpha Corporate Class has proven its ability to add alpha, as shown in this chart, which compares the growth of invested in United Canadian Equity Alpha Corporate Class versus the benchmark. United Canadian Equity Alpha Corporate Class annualized compound returns as of March 31, year 18.1% 3 year 11.8% Since inception 9.3% $16,000 $12,000 $8,000 $4,000 United Canadian Equity Alpha Corporate Class Canadian Equity Alpha Corporate Class* S&P/TSX Composite Index Sept. 08 Sept. 09 Sept. 10 Sept. 11 Sept. 12 Mar. 13 *Growth of invested in United Canadian Equity Alpha Corporate Class Class I between October 1, 2008 and March 31, 2013 versus the S&P/TSX Composite Index over the same period. Performance does not include management fees or expenses. Performance comparison to the S&P/TSX Composite Index, a broad-based large capitalization index, may differ significantly due to investment strategy and is shown here for illustrative purposes. QV Investors Inc. was selected for its ability to provide alpha over the long term. Given that United Canadian Equity Alpha Corporate Class was only launched in 2008, we ve gone back to see how well they did in a similar Canadian equity mandate that they ve managed since January 1, The chart below compares the growth of invested in QV s Canadian Equity Large Cap Mandate versus the benchmark. QV Canadian Equity Large Cap Mandate Annualized compound returns as of March 31, $40,000 $30,000 QV Canadian Equity Large Cap Mandate QV Canadian Equity Large Cap Mandate* Date QV Canadian Equity Large Cap changed S&P/TSX Composite Index 1 year 14.7% 3 year 9.1% 5 year 6.7% 10 years 12.8% $20,000 Dec. 02 Dec. 04 Dec. 06 Dec. 08 Dec. 10 Mar. 13 *Growth of invested in QV s Canadian Equity Large Cap Mandate between February 1, 2002 and March 31, 2013 versus the S&P/TSX Composite Index over the same period. QV s Canadian Equity Large Cap Mandate consists of the QV Canadian Equity Mandate starting January 1, 2007 and prior to that is the return of the equity portion of the QV Balanced Mandate (averaging an allocation of 40% over the period). Both mandates are separately managed accounts available only to high net worth and institutional investors. Performance does not include management fees or expenses. Performance comparison to the S&P/TSX Composite Index, a broad-based large capitalization index, may differ significantly due to investment strategy and is shown here for illustrative purposes.

3 United US Equity Alpha Danny Bubis describes the U.S. alpha mandate: Our alpha approach is to buy shares of companies that have very good upside potential versus downside risk. The more conviction we have in any individual company, the more we ll put of it in the portfolio. But we re also going to make sure the holdings are not all in one industry sector because we want to be relatively diversified. Mr. Bubis s U.S. equity mandate avoided the tech bubble of in a contrarian call that proved the value of his disciplined approach. In contrast to many investors, he decided to underweight technology stocks, relative to their representation in the benchmark S&P 500 Index. It was a move that meant his mandate underperformed the benchmark by 44% (13% versus 57%) during the tech run-up. But it paid off when the bubble burst in 2000: Over the following two years, his mandate outperformed the benchmark by 66 percentage points (54% versus -12%). Since its launch in September 2008, United US Equity Alpha Corporate Class has proven its ability to add alpha, as shown in this chart, which compares the growth of invested in the United US Equity Alpha Corporate Class versus the benchmark. $16,000 $12,000 $8,000 United US Equity Alpha Corporate Class United US Equity Alpha Corporate Class annualized compound returns as of March 31, year 10.0% 3 year 6.7% Since inception 6.3% $4,000 US Equity Alpha Corporate Class* S&P 500 Index (C$) Sept. 08 Sept. 09 Sept. 10 Sept. 11 Sept. 12 Mar. 13 *Growth of invested in United US Equity Alpha Corporate Class Class I between October 1, 2008 and March 31, 2013 versus the S&P 500 (C$) Index over the same period. Performance does not include management fess or expenses. Performance comparison to the S&P 500 Index, a broad-based large capitalization U.S. index, may Tetrem Capital Management Ltd. was selected for its ability to provide alpha over the long term. Given that the United US Equity Alpha Corporate Class was only launched in 2008, we ve gone back to see how well they did in a similar U.S. equity mandate that they ve managed since January 1, The chart compares invested in the Tetrem Capital Management Ltd. Equity Mandate versus the benchmark. Tetrem US Equity Mandate Annualized compound returns as of March 31, $20,000 Tetrem US Equity Mandate Tetrem US Equity (C$) Mandate* S&P 500 Index (C$) $15,000 1 year 9.8% 3 year 6.0% 5 year 4.1% 10 years 5.8% $5,000 Dec. 02 Dec. 04 Dec. 06 Dec. 08 Dec. 10 Mar. 13 *Growth of invested in Tetrem s US Equity Mandate (C$) between February 1, 2002 and March 31, 2013 versus the S&P 500 Index (C$) over the same period. Tetrem s US Equity Mandate (C$) is a separately managed account that is available to high net worth and institutional investors. Performance does not include management fees or expenses. Performance comparison to the S&P 500 Index, a broad-based large capitalization U.S. index, may

4 United International Equity Alpha David Picton and Michael Kuan describe the potential of the international alpha mandate: What makes this mandate different is its unconstrained stock selection. It s basically pure alpha, which we believe over time will result in higher performance. One of the most consistent ways to add value is by finding stocks with positive fundamental change stocks that are improving for the better, where the earnings growth rate is accelerating or where they re beating analysts and investors expectations. Our approach is to deliver alpha with a healthy dose of risk control, which includes having a number of sectors and countries represented at all times. Since its launch in September 2008, United International Equity Alpha Corporate Class has proven its ability to add alpha, as shown in this chart, which compares the growth of invested in the United International Equity Alpha Corporate Class versus the benchmark. United International Equity Alpha Corporate Class annualized compound returns as of March 31, year 17.8% 3 year 7.5% Since inception 3.2% $14,000 $12,000 $,8000 $6,000 $4,000 $2,000 United International Equity Alpha Corporate Class International Equity Alpha Corporate Class* MSCI EAFE Index (C$) Sept. 08 Sept. 09 Sept. 10 Sept. 11 Sept. 12 Mar. 13 *Growth of invested in United International Equity Alpha Corporate Class Class I between October 1, 2008 and March 31, 2013 versus the MSCI EAFE (C$) Index over the same period. Performance does not include management fess or expenses. Performance comparison to the MSCI EAFE Index, a broad-based large and mid-capitalization index, may Picton Mahoney Asset Management was selected for its ability to provide alpha over the long term. Given that the United International Equity Alpha Corporate Class was only launched in 2008, we ve gone back to see how well they did in a similar international equity mandate that they ve managed since February 1, The chart compares invested in the Picton Mahoney International Equity Mandate versus the benchmark. Picton Mahoney International Equity Mandate Annualized compound returns as of March 31, year 16.8% 3 year 9.1% 5 year 2.1% 10 year 9.3% $25,000 $20,000 $15,000 $5,000 Picton Mahoney International Equity Mandate Picton Mahoney International Equity (C$) Mandate* MSCI EAFE Index (C$) Dec. 02 Dec. 04 Dec. 06 Dec. 08 Dec. 10 Mar. 13 *Growth of invested in Picton Mahoney s International Equity Mandate (C$) between February 1, 2002 and March 31, 2013 versus the MSCI EAFE Index (C$) over the same period. Picton Mahoney s International Equity Mandate (C$) consists of the international component (excluding the U.S. and Canadian portions which accounted for an approximate average of 50% of the fund) of their Synergy Global Equity Corporate Class Class I run under Picton Mahoney s asset management name, Synergy Asset Management. Performance does not include management fees or expenses. Performance comparison to the MSCI EAFE Index, a broad-based large and mid-capitalization index, may

5 United Canadian Equity Alpha QV Investors Inc. is well known for its small-company portfolios managed by Portfolio Manager Joe Jugovic since 2000 and its equally successful large company mandates managed since 1999 by Chief Investment Officer Leigh Pullen. United US Equity Alpha Tetrem Capital Management Ltd. has been managing money for United Financial since Tetrem and its Chief Investment Officer, Daniel Bubis, have an extensive track record of managing U.S. assets. United International Equity Alpha Picton Mahoney Asset Management specializes in equity portfolios. Chief Investment Officer David Picton and Portfolio Manager Michael Kuan are founding partners of Picton Mahoney Asset Management. The firm focuses on strong risk-adjusted returns by combining fundamental and quantitative analysis as the foundation for its success.

6 Is alpha for you? Due to their characteristics, our alpha mandates may be appropriate as part of, or as replacements for, your core equity holdings. If you are looking for investments that focus on absolute returns that are not directly correlated to the performance of market benchmarks, and represent a select portfolio of an investment manager s best ideas, then our alpha mandates may be appropriate for you. Talk to your advisor to see how United Financial s alpha mandates can enhance the growth potential of your investment program. Commissions, trailing commissions, management fees and expenses all may be associated with investments in Evolution Private Managed Accounts. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account management fees, expenses, sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please consult your advisor before investing. United Financial and the United Financial design are trademarks of CI Investments Inc. UNITED FINANCIAL 2 Queen Street East, 19th Floor, Toronto, Ontario M5C 3G7 Telephone: Fax: service@unitedfinancial.ca _E (07/13)