Redefining Active Management
Yoonjai Shin, CFA
Director, CI Investment Consulting
Agenda
• CI Investment Consulting team
• Redefining active management
• Market outlook
2
CI Investment Consulting Team
Alfred Lam, CFA
VP & Portfolio Manager
Investment strategy / Asset allocations
Fund selection/ Currency strategy
Communications
Lewis Harkes, CFA
Senior Analyst
Yoonjai Shin, CFA
Director
Andrew Ashworth
Analyst
Fund/manager analysis
Performance reporting
Fund/manager analysis
Asset allocations
Currency strategy
Fund selection
Project management
Fund/manager analysis
Cash flow management
Performance reporting
Marchello Holditch
Senior Analyst
Fund/manager analysis
3
What do we manage?
$20 billion in assets under management
4
Industry recognition
Best Fund of Funds Award -2011
Best Fund of Funds Award -2012
Best Global Fixed Income Balanced Award -2012
Best Global Fixed Income Balanced Award -2013
5
The new normal
•
•
Bond return expectation is very low
Equity returns are more attractive but have high
volatility
Investors can either take more risks or demand from their
portfolio manager to work harder
6
Redefining Active Management
Manage/
Reduce
Optimize
Minimize
Total return = Asset mix + Alpha + Market Beta + Currency – Tax – Fees
Maximize
Manage
Reduce
7
Access to managers under one roof
8
Solution for every investor
Expected Return %
.
.
. .
GIC
PE expansion
.
Gov’t
Bonds
100e
40i60e
100i
Volatility
For illustration purposes only; there is no guarantee on results
9
Strong performance
PSS 40i60e
PS Balanced
Quotential Balanced Growth Portfolio
Fidelity Balanced Portfolio
Dynamic Edge Balanced Portfolio
AGF Elements Balanced Portfolio
40% DEX, 60% TSX
2013*
9.2
8.3
5.4
5.0
5.0
4.6
1.9
2012
9.2
8.1
6.4
8.1
6.0
6.8
5.2
2011
-2.9
-2.8
-4.5
-2.8
-3.7
-3.0
-1.4
*May 31, 2013
10
Why are we out-performing?
•
•
•
•
Superior income allocation
Overweight US equity
Currency hedges did not cost us even though CAD has
depreciated in general
Strong performance from Cambridge and QV (PSS
only)
11
Outlook: US vs. Canada
26
Price-Earnings Multiples
Based on 12 Month Forward Operating Earnings
26
TSX
S&P 500
24
24
22
22
Overweight US
20
20
18
18
16
16
14
14
12
12
10
10
8
8
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
Bottom Up Earnings Based on CPMS (TSE) and IBES (S&P) Consensus
Source: TD Securities
12
Outlook: US vs. Canada
Real GDP Growth, Y/Y % Chg
6%
GDP growth forecast
2013
2014
US
2.0%
3.2%
Canada
1.6%
2.4%
4%
2%
0%
-2%
Forecast
-4%
US
Source: CIBC
14:3
13:4
13:1
12:2
11:3
10:1
09:2
08:3
07:4
-6%
10:4
Canada
13
Outlook: continued monetary easing
6%
4%
2%
Fed Funds
Rate
0%
-2%
-4%
-6%
2004
2008
2012
Equivalent
stimulus
impact
(including
QE)
Source: Rudebusch (FRBSF Economic Letter, 2010), Haver Analytics, Federal Reserve, CIBC
14
Outlook: volatile bond markets
Volatility in bond markets leading to tactical opportunities
Government of Canada benchmark bond yields - 10 year
GRAPH PERIOD: 28 May 2012 - 28 May 2013
Source: Bank of Canada
15
Outlook: Canadian dollar
Canadian dollar is 17% overvalued based on Purchasing Power Parity
USDCAD - PPP vs Actual
1.700
USDCAD - PPP
1.600
USDCAD - Actual
1.500
1.400
1.300
1.200
1.190
1.100
1.016
1.000
0.900
Source: Bloomberg
2011
2006
2001
1996
1991
1986
0.800
16