Symmetry Portfolios. Pension-style thinking. Investor Guide

Transcription

1 s Pension-style thinking Investor Guide 1

2 2 Canadian pension plans have won the attention of Wall Street, which considers them rivals, and institutional investors, which aspire to be like them.

3 Canada s pension plans are considered among the world s best managed investments. In fact, in 2012, The Economist magazine singled out Canada s pension managers for having won the attention of Wall Street, which considers them rivals, and Institutional investors, which aspire to be like them. s are managed by a team with deep pension experience. They use that expertise to apply some of the best practices of the pension world to the management of a suite of diversified and balanced portfolios for investors seeking to reach their goals. 3

4 The Importance of Diversification and Balance Reaching investment goals can be difficult when changes in markets and life objectives take investors off course. When things change, it s easy to lose focus on the long term, and succumb to simply chasing the best performing asset classes. But as the chart below demonstrates, chasing winners is rarely a winning strategy. The best performing asset classes tend to vary from year to year. And since you can t predict which category will win next, investors who chase winners inevitably end up following last year s top performers. Adopting a more consistent, balanced approach is essential for both long-term investment success and peace of mind. 4

5 Top Performing Markets Change Year to Year. Having a well-diversified portfolio gives you a smoother ride LOWER PERFORMANCE RANKING HIGHER Canadian Bonds Emerging Markets Global BALANCED PORTFOLIOS Canadian Large Cap Foreign US Large Cap Canadian Small Cap Global Bonds US Small Cap Source: Mackenzie Investments and Morningstar as at December 31, Canadian Bonds: FTSE TMX Canada Universe Bond Index; Canadian Large Cap: S&P/TSX Composite TR Index; Canadian Small Cap: BMO NB SMCap Blend Wgt d Index; Emerging Markets: MSCI Emerging Markets Index (CAD); Foreign : MSCI EAFE Index (CAD); Global Bonds: Citigroup World Government Bond Index (CAD); Global : MSCI World Index (CAD); US Large Cap: S&P 500 Index (CAD); US Small Cap: Russell 2000 Index (CAD). Balanced is equal weight of the indices above. 5

6 s: Diversification and Balance 6 LOWER RETURN POTENTIAL HIGHER Conservative Income Conservative Income Conservative Income Conservative Income Conservative Conservative Conservative Conservative Balanced Balanced Symm Balan Portf Symmet Balanced 50% F 50% E (Grey) US 0.4% Canadian 8.5% US 13.1% Canadian Equ Other 0.3% US 8.0% Canadian 11.9% US (Blue) European 65% 3.9% European Fixed Income 5.8% European Eq Corporates 41.6% Emerging Market Income (Grey) Conservative 35% 1.5% Emerging Market 3.2% Emerging Ma Federal Government 23.4% IncomeJapanese Conservative 0.8% Japanese Balanced 1.3% Japanese Equ US Provincial Governments 0.4% 15.1% Canadian Asia ex-japan 8.5% US 0.6% Asia ex-japan 13.1% 0.9% Canadian Asia ex-japan Other Foreign Governments 0.3% 5.9% US Other 8.0% Canadian 0.5% Other 11.9% 0.4% US Other Cash (Blue) & Equivalents 5.5% European 3.9% European 5.8% European Fixed Incom Corporates Bank Loans 41.6% 80% 4.4% Emerging Market Fixed Corporates 1.5% Emerging Income 31.7% Market Corporates 3.2% 26.0% Emerging Market Corporates Federal Government Mortgage Backed 23.4% 2.4% Japanese Federal Government 0.8% Japanese 14.0% Federal Government 1.3% 12.7% Japanese Federal Gove Provincial Governments 20% (Grey) Municipal Governments 15.1% 0.9% Asia ex-japan Provincial Governments 0.6% Asia 9.1% ex-japan Provincial Governments 0.9% 8.2% Asia ex-japan Foreign Gove Foreign Governments 5.9% Other US 0.4% Canadian Foreign Governments 0.5% 8.5% Other US 8.2% Cash & Equivalents 0.4% 13.1% Canadian 5.7% Other Provincial Go Cash & Equivalents 5.5% Other 0.3% US Cash & Equivalents 8.0% Fixed Canadian 6.9% Income Foreign Governments 11.9% US 5.7% Cash & Equiv Bank Loans 4.4% Corporates (Blue) European Bank Loans 31.7% 3.9% Corporates European 3.9% Bank Loans 26.0% 5.8% European 3.0% Corporates Bank Loans Mortgage Backed 2.4% Federal Government Corporates 41.6% Emerging Market Mortgage Backed 14.0% 1.5% Federal Emerging Market 2.0% Government Mortgage Backed 12.7% Federal 3.2% Emerging Market 1.6% Government Mortgage Ba Municipal Governments 0.9% Provincial Governments 9.1% Federal Government 23.4% Japanese Municipal Governments 0.8% Provincial Japanese 0.5% Governments Municipal Governments 8.2% 1.3% Japanese 0.5% Foreign Governments Municipal Go 100% Provincial Fixed Governments Income Foreign Governments 8.2% 15.1% Asia ex-japan 0.6% Cash & Equivalents 5.7% Provincial Governments Asia ex-japan 0.9% Asia ex-japan Cash & Equivalents 6.9% Foreign Governments 5.9% Other 0.5% Foreign Governments 5.7% Cash & Equivalents Other 0.4% Other Cash (Grey) & Equivalents 5.5% Bank Loans 3.9% Bank Loans 3.0% Bank Loans US Bank Loans 0.4% 4.4% Canadian Corporates Mortgage Backed 8.5% 31.7% US 2.0% Mortgage Backed Corporates 13.1% 26.0% Canadian 1.6% Corporates Mortgage Backed 18.8% Other LOWER 0.3% US Municipal Governments 8.0% Canadian 0.5% 11.9% US RISK 17.4% P Mortgage Backed 2.4% Federal Government 14.0% Municipal Governments 0.5% Municipal Governments Federal Government 12.7% Federal Government Fixed Municipal Income (Blue) Governments 0.9% European Provincial Governments 3.9% 9.1% European Provincial Governments 5.8% 8.2% European Foreign Governments 8.3% Corporates 41.6% Emerging Foreign Market Governments 1.5% 8.2% Emerging Cash Market & Equivalents 3.2% 5.7% Emerging Provincial Market Governments 4.6% Federal Government 23.4% Japanese Cash & Equivalents 0.8% 6.9% Japanese Foreign Governments 1.3% 5.7% Japanese Cash & Equivalents 1.8% Provincial Governments 15.1% Asia ex-japan Bank Loans 0.6% 3.9% Asia ex-japan Bank Loans 0.9% 3.0% Asia ex-japan Bank Loans 1.3% Foreign Governments 5.9% Other Mortgage Backed 0.5% 2.0% Other Mortgage Backed 0.4% 1.6% Other Mortgage Backed 0.4% Cash & Equivalents 5.5%

7 Investing with ensures you will always have some exposure to top performing categories, while mitigating exposure to the worst performers. The result is a series of seven optimized and broadly diversified portfolios tied to distinct risk tolerance and return needs. Balanced Balanced Balanced ry etry ced olio Moderate Growth Growth Moderate Growth Growth Moderate Growth Growth Growth Growth Moderate Growth Equity Class Equity Equity Equity Class Class Class Equity Class 100% 20% 13.1% Canadian 18.8% US 21.8% 80% US 25.7% US 32.9% 35% 11.9% US 17.4% Canadian 20.6% US 21.8% Canadian 25.6% Canadian 28.6% 13.1% Canadian 18.8% US 25.7% US 32.9% 11.9% 5.8% European 65% US 17.4% 8.3% European Canadian 20.6% 10.8% European Canadian 12.8% European 16.2% 25.6% Canadian 28.6% 5.8% Canadian ixed 3.2% Emerging Market Income European 18.8% US 8.3% 4.6% Emerging Market European 21.8% 10.8% US 6.9% Emerging Market European 25.7% US 12.8% 8.9% Emerging Market European 32.9% 10.5% 16.2% 3.2% US 1.3% Japanese Emerging Market 17.4% 4.6% Canadian 1.8% Japanese Emerging Market 20.6% Canadian 6.9% 2.5% Japanese Emerging Market 25.6% Canadian 8.9% 2.9% Japanese Emerging Market 28.6% 3.7% 10.5% 1.3% European quities 0.9% Asia ex-japan Japanese 8.3% European 1.8% 1.3% Asia ex-japan Japanese 10.8% European 2.5% 2.0% Asia ex-japan Japanese 12.8% European 2.9% 2.5% Asia ex-japan Japanese 16.2% 3.0% 3.7% ities 0.9% Emerging 0.4% Market Asia ex-japan 18.8% Other US 4.6% Emerging 0.4% 1.3% Market Asia ex-japan 21.8% Other US 6.9% Emerging 2.0% Market 0.4% Asia ex-japan 25.7% Other US 8.9% Emerging 2.5% Market 0.3% Asia ex-japan 32.9% Other 10.5% 0.3% 3.0% 0.4% Japanese Other 17.4% Canadian 1.8% 0.4% Japanese Other 20.6% Canadian 2.5% Japanese 0.4% Other 25.6% Canadian 2.9% Japanese 0.3% Fixed Other 28.6% 3.7% 0.3% uities Asia ex-japan 26.0% Fixed Income 8.3% Corporates European 1.3% Asia ex-japan 19.7% Fixed Income 10.8% Corporates European 2.0% Asia ex-japan 13.9% Fixed Income 12.8% Corporates European 2.5% Asia ex-japan 8.3% Fixed Income 16.2% Cash & Equivalents 3.0% 4.9% Canadian Federal Governments 26.0% rket Other 12.7% Corporates 4.6% Federal Government Emerging 0.4% Market 19.7% Other 7.8% Corporates 6.9% Federal Government Emerging 0.4% Market Other 13.9% 5.6% Corporates 8.9% Cash & Equivalents Emerging 0.3% Market Other 8.3% 4.4% Cash & Equivalents 10.5% 0.3% 4.9% 12.7% ities 8.2% Federal Government 1.8% Foreign Governments Japanese Fixed 7.8% Income 5.8% Federal Government 2.5% Cash & Equivalents Emerging Japanese Market Fixed 5.4% 5.6% Income Cash & Equivalents 2.9% Federal Government Japanese Fixed 4.4% Income 2.8% Provincial 3.7% Governments 8.2% Corporates 5.7% Provincial Foreign Governments 1.3% Governments Asia 19.7% ex-japan Corporates 5.8% 5.1% Cash & Equivalents 2.0% Foreign Governments Asia 13.9% ex-japan Corporates 3.9% 5.4% Federal Government 2.5% Foreign Governments Asia 8.3% ex-japan Cash 2.8% & Equivalents 2.6% 3.0% 4.9% 5.7% 5.7% Federal Government Provincial Governments 0.4% Cash & Equivalents Other 7.8% Federal 5.0% 5.1% Government Foreign Governments 0.4% European Provincial Other Governments 5.6% Cash 3.7% 3.9% & Equivalents Foreign Governments 0.3% Provincial Governments Other 4.4% 2.6% Municipal 1.8% 0.3% Governments e 3.0% Bank Loans 5.7% Foreign Governments Cash & Equivalents Fixed 5.8% Income 2.4% Bank Loans 5.0% Cash & Equivalents Provincial Governments Fixed 5.4% Income Federal 1.4% 3.7% Government Bank Loans Japanese Provincial Governments Fixed 2.8% Income 0.9% 1.8% 1.6% Foreign Governments 3.0% Provincial Governments Bank Loans 19.7% Mortgage Backed Corporates 5.1% Foreign 1.3% 2.4% Governments Bank Loans 13.9% Mortgage Corporates Backed 3.9% Foreign 0.9% 1.4% Governments Bank Loans 8.3% Mortgage Backed Cash 2.6% & Equivalents 0.5% 0.9% 4.9% rnment 0.5% 1.6% Cash & Equivalents Mortgage Backed 7.8% Municipal Governments Federal 5.0% Government Provincial 0.3% 1.3% Governments Mortgage 5.6% Municipal US Backed Cash Governments 3.7% & Equivalents Provincial 0.2% 0.9% Governments Mortgage Backed 4.4% Municipal Governments 1.8% 0.1% 0.5% Corporates rnments 0.5% Bank Loans Municipal Governments 5.8% Cash 2.4% & Equivalents 0.3% Bank Loans Municipal 5.4% Governments Federal 1.4% Government Bank 0.2% Loans Municipal Governments 2.8% 0.9% 0.1% vernments Mortgage Backed 5.1% Foreign 1.3% Governments Mortgage Backed 3.9% Asia ex-japan Foreign 0.9% Governments Mortgage Backed 2.6% 0.5% Mortgage Backed alents Municipal Governments 5.0% Provincial 0.3% Governments Municipal Governments 3.7% Provincial 0.2% Governments Municipal Governments 1.8% 0.1% Other Bank Loans 2.4% Bank Loans 1.4% Bank Loans 0.9% cked 1.3% Mortgage Backed 0.9% Mortgage Backed 0.5% Cash & Equivalents vernments 0.3% Municipal Governments 0.2% Municipal Governments 0.1% OTENTIAL HIGHER 7

8 Enhancing the Pension-Style Experience with Sophisticated Features Monitoring and Rebalancing Target allocations for the portfolios are closely monitored relative to each portfolio s risk attributes, with the team investing daily cash flows to maintain targets. The team will rebalance to help the portfolios stay within target risk levels when larger market movements result in changes outside of an acceptable range. Third Party Managers The team selects the world s leading investment professionals from among Mackenzie s investment teams, as well as third party managers. employs customized investment pools designed specifically for. Money Managers Currency Management Currency is managed to enhance return potential and reduce volatility created by its fluctuations. The team takes an active approach with flexibility to hedge back to the Canadian dollar. 8

9 Completion Pool The Completion Pool is an important tool used to achieve greater precision in the portfolios. By using ETFs and futures, the team can make portfolio adjustments without requiring s underlying managers to make unscheduled rebalances to their portfolios. This preserves the integrity of the underlying mandates and avoids unintended and undesired changes to other asset class and exposures. Tax Efficiency s are available in tax-efficient options for both accumulation and decumulation investment stages. ACCUMULATION Corporate Class: Tax-efficient growth DECUMULATION Series T: Tax-efficient income Mackenzie Investments Corporate Class structure is designed to minimize and defer tax, which allows wealth to build faster compared to traditional trust portfolios. Mackenzie Investments Series T allows you to receive customizable taxefficient monthly income. The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with a fund s performance, rate of return or yield. If distributions paid by the fund are greater than the performance of the fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a fund, and income and dividends earned by a fund are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero. 9

10 The s Management Team: Pension experience. Pension-style thinking. Alain Bergeron, CFA Senior Vice President, Investment Management Head of the Mackenzie Asset Allocation Team and head of alternative strategies at Mackenzie Investments. 10 years experience at the Canada Pension Plan Investment Board (CPPIB), including the role of Vice- President and Head of Global Tactical Asset Allocation. Built and led a team of 25 investment professionals at the CPPIB to execute global investment strategies on behalf of CPP investors. Todd Mattina, Ph. D Chief Economist and Strategist Spent 10 years with the International Monetary Fund (IMF), in progressively senior roles, including two years as Deputy Division Chief. Experience as Manager, Global Tactical Asset Allocation, with the CPPIB. PhD in Economics (International Macroeconomics & Finance) from Queen s University. 10

11 The s Management Team combines institutional calibre pension investment experience with strong portfolio management base. Andrea Hallett, CFA Vice President, Investment Management Investment experience since 1998, providing asset allocation expertise at Mackenzie Investments since Responsibilities have included the oversight of external portfolio managers, as well as the management of a strategic asset allocation program. Siyan Tan, MFin, CFA Vice President, Investment Management Past member of the Tactical Asset Allocation Group of the Ontario Teachers Pension Plan. Experience in discretionary macro and systematic investing and derivatives trading, combined with a solid technical and academic background. Expertise in risk management and portfolio construction. Aditya Tayal, Ph. D Senior Investment Analyst Formerly Associate Manager on the Global Tactical Asset Allocation Team at the CPPIB. PhD in Computer Science, with specialization in advanced statistics and forecasting (Machine Learning). Expertise in portfolio optimization, risk management and systematic asset return forecasting. 11

12 Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments and the use of an asset allocation service. Please read the prospectus of the mutual funds in which investment may be made under the asset allocation service before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds are distributed by LBC Financial Services Inc. ( LBCFS ). LBCFS is a wholly owned subsidiary of Laurentian Bank of Canada and is a corporate entity separate from Laurentian Bank, B2B Trustco and Mackenzie Investments A /16 12