GPS Optimized Portfolios

Transcription

1 GPS Optimized Portfolios Returns include peace of mind. To us there are no foreign markets. TM

2 A global investment opportunity from a global wealth management firm Canaccord Genuity Wealth Management enables investors to reach the coordinates that define their life goals. * ICICI Alliance

3 Global expertise from Canaccord Genuity thought leaders Tony Dwyer US Portfolio Strategist & Senior Managing Director, Canaccord Genuity Corp. (US) Cameron B. Hurst Senior Vice President & Chief Portfolio Manager, North America, Canaccord Genuity Wealth Management (CAD) Robert Jukes Global Strategist, Canaccord Genuity Wealth Management (UK) Martin Roberge North American Portfolio Strategist & Technical Analyst, Managing Director, Canaccord Genuity Corp. (CAD) Page 2

4 An award-winning investment process designed to cap volatility Internationally recognized as a best-in-class investing discipline In the UK, Canaccord Genuity Wealth Management s successful investment strategy based on the same model received the Gold Standard Award for Discretionary Portfolio Management in 2012 and 2013, as well as a five-star rating by independent research firm Defaqto. Page 3

5 GPS Optimized Portfolios uniquely focus on risk rather than return at a level best suited to your personal risk profile. In other words, returns include peace of mind. Page 4

6 The historical investment experience To us there are no foreign markets. TM

7 It s been an emotionally challenging and bumpy road S&P/TSX Composite Index Source: Bloomberg, Canaccord Genuity Wealth Management. Page 6

8 so maybe it s time for a new approach? Increasing volatility can lead to emotion-based investment decisions and not always the right ones! Euphoria Excitement Denial Fear Optimism Optimism Panic Hope Despondency Depression Page 7

9 Understanding traditional approaches to asset management To us there are no foreign markets. TM

10 Modern Portfolio Theory taught us not to carry all our eggs in one basket It also taught us diversification. And from that came the practice of benchmarking. Page 9

11 Benchmarks typically specify a fixed weight to each basket Balanced Benchmark Alternatives 8% Cash 4% Fixed Income 20% Equity 68% Page 10

12 Benchmark-constrained managers Benchmark Maximum Benchmark Deviation (Underweight Equities) Alternatives 8% Cash 4% Cash 10% Fixed Income 20% Equity 68% Alternatives 8% Equity 61% Fixed Income 21% In other words, there is not much control over the portfolio. Page 11

13 Benchmarking encourages a follow the herd approach Sector/Industry Weights Minimum number of sectors: 4 Range of sector weights: Canadian Equity: Consumer Discretionary Benchmark +/- 10% Consumer Staples Benchmark +/- 10% Energy Benchmark +/- 10% Financials (ex REITS) Benchmark +/- 15% REITS and Real Estate Benchmark +/- 15% Healthcare Benchmark +/- 10% Industrials Benchmark +/- 7% The reality of traditional asset management: Portfolio managers have little room to move away from benchmark weights in order to protect client capital. Information Technology Benchmark +/- 10% Materials Benchmark +/- 25% Telecom Services Benchmark +/- 7% Utilities Benchmark +/- 10% Page 12

14 Benefits and shortcomings of traditional asset management Benefits Widely accepted and understood Easy to implement Reduces portfolio risk in normal markets There s comfort in the crowd Shortcomings Fails to protect client capital in serious market downturns Tracking error constraints Maximum cash levels Rebalancing into poorly performing sectors Page 13

15 Modern Portfolio Theory hasn t substantially evolved since 1952 Would you trust your money to a methodology that is more than 60 years old? Page 14

16 Breaking with tradition: GPS Optimized Portfolios To us there are no foreign markets. TM

17 GPS Optimized Portfolios It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change. - Darwin Page 16

18 Is it more important to capture the largest gains MSCI World excluding the 10 best week returns MSCI world ($) Excluding 10 best weeks Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. Page 17

19 or to avoid the worst losses? MSCI World excluding the 10 best week returns MSCI world ($) Excluding 10 best weeks Excluding 10 worst weeks Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. Page 18

20 CGWM has developed a proprietary Market Stress Indicator (MSI) to gauge the level of stress in the market. Our proprietary MSI looks forward, recognizing that risk and correlation change, and appropriately accounts for the current level of market risk, even in stressed environments. Page 19

21 Our proprietary Market Stress Indicator helps us look forward Our MSI focuses on better measuring risk, instead of chasing return. CGWM Market Stress Indicator versus TSX Normal Stressed TSX 4000 Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. Page 20

22 Delivering our clients an unemotional appraisal of risk Page 21

23 With traditional asset management, how would you feel? It s a bumpy ride. 30% 24% Average risk approach (WMA nee APCIMS) +/- 2 standard deviations 18% 12% 6% 0% -6% -12% -18% Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. Page 22

24 UK Optimized Portfolios: Results that speak for themselves To us there are no foreign markets. TM

25 An innovative, forward-looking risk management framework $1,400,000 that aims to provide you with steadier returns and more certainty UK GPS Performance Inception through August 31 st 2015 $1,300,000 $1,200,000 Euro Crisis $1,100,000 $1,000,000 $900,000 UK GPS Optimized Portfolio 5 FTSE 100 $800, CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND. The Portfolio Valuation illustrated here is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed. Nor in providing it does Canaccord Genuity Corp., its agents, subsidiaries or affiliated companies ("the Firm") assume any liability. This information is given as of the date appearing in this summary, and the Firm assumes no obligation to update the information or advise on further developments relating to these securities. Performance is not guaranteed, values change frequently and past performance may not be repeated. Page 24

26 Only by abandoning the benchmark were we able to achieve these results Asset allocation as of 08/08/2011 WMA Balanced GPS #5 8% 5% 20% 2% Fixed Interest Equities Alternatives Cash 68% 98% By moving decisively away from benchmark, into 100% fixed income and cash, client capital was better protected than by hiding in the benchmark. Page 25

27 Canadian Results Mirror the Success of the UK Platform Canadian Optimized Portfolio 5 Performance Inception through September 25 th 2015 $1,140,000 $1,120,000 $1,100,000 $1,080,000 $1,060,000 $1,040,000 $1,020,000 $1,000,000 $980,000 $960,000 $940,000 $920,000 $900,000 $880,000 Performance - Inception through Sept $1,085,000 (+8.5%) $993,852 (-0.6%) $915,954 (-8.4%) GPS Optimized Portfolio 5 S&P 500 Total Return S&P/TSX Total Return CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND. The Portfolio Valuation illustrated here is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed. Nor in providing it does Canaccord Genuity Corp., its agents, subsidiaries or affiliated companies ("the Firm") assume any liability. This information is given as of the date appearing in this summary, and the Firm assumes no obligation to update the information or advise on further developments relating to these securities. Performance is not guaranteed, values change frequently and past performance may not be repeated. Page 26

28 A sophisticated approach to portfolio diversification GPS Optimized Portfolios UK Performance as of August 31, 2015 Performance data since inception, Jan 2011 Standard Deviation (Annualised) Portfolio Return (Annualised) Max Portfolio Benchmark* Reduction Portfolio Benchmark* Difference Beta Drawdown CG GPS UK #2 1.1% 3.2% -66% 2.1% 3.4% -1.29% 4% -1.00% CG GPS UK #3 2.5% 3.2% -22% 5.1% 3.4% 1.74% 9% -2.32% CG GPS UK #4 4.3% 5.3% -18% 5.6% 4.2% 1.33% 18% -4.54% CG GPS UK #5 6.2% 6.6% -6% 5.8% 4.9% 0.90% 37% -5.74% CG GPS UK #6 7.8% 8.3% -6% 6.5% 5.2% 1.31% 47% -7.20% *Benchmark is a peer comparison provided by Asset Risk Consulatns CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND. The Portfolio Valuation illustrated here is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed. Nor in providing it does Canaccord Genuity Corp., its agents, subsidiaries or affiliated companies ("the Firm") assume any liability. This information is given as of the date appearing in this summary, and the Firm assumes no obligation to update the information or advise on further developments relating to these securities. Performance is not guaranteed, values change frequently and past performance may not be repeated. Page 27

29 The GPS Optimized Portfolios advantage in action UK GPS Performance Inception through August 31 st 2015 $1,200,000 $1,150,000 $1,100,000 UK GPS Optimized Portfolios 6 FTSE 100 $1,050,000 $1,000,000 $950,000 $900,000 $850,000 Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND. The Portfolio Valuation illustrated here is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed. Nor in providing it does Canaccord Genuity Corp., its agents, subsidiaries or affiliated companies ("the Firm") assume any liability. This information is given as of the date appearing in this summary, and the Firm assumes no obligation to update the information or advise on further developments relating to these securities. Performance is not guaranteed, values change frequently and past performance may not be repeated. Page 28

30 The GPS Optimized Portfolios advantage in action UK GPS Performance Inception through August 31 st 2015 $1,500,000 $1,400,000 $1,300,000 $1,200,000 $1,100,000 GPS #2 GPS #3 GPS #4 GPS #5 GPS #6 FTSE100 $1,000,000 $900,000 $800, Source: DataStream, Bloomberg, Canaccord Genuity Wealth Management. CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND. The Portfolio Valuation illustrated here is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed. Nor in providing it does Canaccord Genuity Corp., its agents, subsidiaries or affiliated companies ("the Firm") assume any liability. This information is given as of the date appearing in this summary, and the Firm assumes no obligation to update the information or advise on further developments relating to these securities. Performance is not guaranteed, values change frequently and past performance may not be repeated. Page 29

31 GPS Optimized Portfolios Features An award-winning investment process designed to cap volatility An innovative, forward-looking risk management framework A sophisticated approach to portfolio diversification Global expertise from Canaccord Genuity thought leaders Benefits A smoother, more confident path toward achieving your investment objectives More certainty for your investments during periods of market volatility The power to reduce the potential for capital loss Direct access to global investment ideas and opportunities Page 30

32 There s a GPS Optimized Portfolio for everyone Each GPS Optimized Portfolio endeavours to cap risk at a different level, meaning there s a solution for clients requiring a very conservative investment approach all the way up to those desiring a more aggressive approach. Page 31

33 A Final Thought: Portfolio Drawdown To us there are no foreign markets. TM

34 Returns based on a toss of a coin: I Over 1,000 repeated tosses of a fair coin where the return is $10 on heads -$10 on tails What is the expected value of a portfolio of $100? Source: Canaccord Genuity Wealth Management. Page 33

35 Returns based on a toss of a coin: I Over 1,000 repeated tosses of a fair coin where the return is $10 on heads -$10 on tails What is the expected value of a portfolio of $100? Expected value = $100 Source: Canaccord Genuity Wealth Management. Page 34

36 Returns based on a toss of a coin: II Over 1,000 repeated tosses of a fair coin where the return is + 10% on heads -10% on tails What is the expected value of a portfolio of $100? Source: Canaccord Genuity Wealth Management. Page 35

37 Returns based on a toss of a coin: II Over 1,000 repeated tosses of a fair coin where the return is + 10% on heads -10% on tails What is the expected value of a portfolio of $100? Expected value = zero Source: Canaccord Genuity Wealth Management. Page 36

38 Value of portfolio Returns based on a toss of a coin: III Over 1,000 repeated tosses of a fair coin where the return is + 10% on heads -10% on tails What is the expected value of a portfolio of $100? Simulation Simulation Source: Canaccord Genuity Wealth Management. Number of coin tosses Page 37

39 Pension drawdown & sequencing of returns: I Pension Drawdown $1,000,000 pension, drawing down $90k a year from age 65, and achieving a 7% average investment return How long before it s all gone? Source: Canaccord Genuity Wealth Management. Page 38

40 Pension drawdown & sequencing of returns: I $1,000,000 pension, drawing down $90k a year and achieving a 7% average investment return $1,000,000 $900,000 $90k annual drawdown, 7% return $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Source: Moshe Milevsky, Canaccord Genuity Wealth Management. Page 39

41 Pension drawdown & sequencing of returns: II $1,000,000 pension, drawing down $90k a year and achieving a 7% average investment return $1,000,000 $900,000 $90k annual drawdown, 7% return $90k drawdown, 7% average return (-13%, 7%, 27%) $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Source: Moshe Milevsky, Canaccord Genuity Wealth Management. Page 40

42 Pension drawdown & sequencing of returns: III $1,000,000 pension, drawing down $77k a year and achieving a 7% average investment return $1,000,000 $900,000 $90k annual drawdown, 7% return $90k drawdown, 7% average return (-13%, 7%, 27%) $77k annual drawdown, 7% return $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Source: Moshe Milevsky, Canaccord Genuity Wealth Management. Page 41

43 Important Information This publication is a general market commentary and does not constitute a research report. Any reference to a research report or a recommendation is not intended to represent the whole report and is not itself a research report or recommendation. This commentary is for informational purposes only and does not contain investment advice. This publication may be wholly or partially based on industry rumour, gossip and innuendo and as such is not to be relied upon as investment advice. As a result, the securities discussed in this report may not be eligible for sale in some provinces. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for general circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of any particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision. To the fullest extent permitted by law, neither Canaccord Genuity Corp., its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of the information contained in this report. In the UK, for the period shown, GPS Optimized Portfolios operated under the product name Risk Enhanced Multi-Asset Portfolios (REMAP). The information herein has been obtained from sources that Canaccord Genuity Wealth Management (CGWM) believes to be reliable. However CGWM does not guarantees its accuracy or completeness and is not responsible for any errors or omissions. All performance data are gross of fees and charges, total return. Past performance is not a guide to future performance. The value of investments and any income from them can go down as well as up and you may not get back the amount originally invested. Investors should note that actual portfolio returns may be different to the returns of the model portfolio Canaccord Genuity Corp. and its affiliates may have an investment banking or other relationship with the companies that are the subject of this report and may trade in any of the securities mentioned herein either for their own account or the accounts of their customers. Accordingly, Canaccord Genuity Corp. or their affiliates may at any time have a long or short position in any such securities, related securities or in options, futures or other derivative instruments based thereon. Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member-Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright Canaccord Genuity Corp Page 42

44 Australia Canada China France Germany Guernsey Ireland Isle of Man Jersey Singapore United States United Kingdom Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member Canadian Investor Protection Fund Member of all Canadian stock exchanges and the Investment Industry Regulatory Organization of Canada The company of the Canaccord Genuity group of companies through which products and services are offered may differ by location and service. See canaccordgenuitygroup.com/en/companies for more information. canaccordgenuity.com