SUCCESS IN
MULTI-ASSET CLASS INVESTING
AGENDA
• CI’s multi-manager excellence
• Investment Consulting Team and philosophy
• Performance highlights
• Investment process
• Outlook
MULTI-MANAGER EXCELLENCE
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, CFA
Senior Analyst
Fund/manager analysis
PORTFOLIO MANAGEMENT
$20 billion in assets under management
INDUSTRY RECOGNITION
Best Fund of Funds Award - 2011
Best Fund of Funds Award - 2012
Best Global Fixed Income Balanced Award - 2013
Morningstar Awards © Morningstar Inc. All Rights Reserved.
Lipper Fund Awards are given by Lipper, Inc. to recognize funds that have provided superior consistency and risk-adjusted returns when compared to a group of
similar funds. Awards are given to the fund with the highest value within its category for the time periods of three, five and 10 years according to the Lipper
Leader ratings for Consistent Return, which reflect funds’ historic returns, adjusted for volatility, relative to peers. Lipper Leader ratings change monthly. For
more information, see lipperweb.com. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the
accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper.
Any use of the data for analyzing, managing, or trading financial instruments is at the user’s own risk. This is not an offer to buy or sell securities. Portfolio Series
Income Fund (Class A) was named Best Global Fixed Income Balanced Fund in February 2013 for the three and five-year periods ending Oct. 31, 2012, out of a
category total of 26 and 19 funds, respectively.
WHAT ARE YOU INVESTING FOR?
For fun?
To get exposure to the markets?
For stability and to grow wealth?
TOTAL RETURN EQUATION
Manage/Reduce
Optimize
Minimize
Total return = Asset mix + Alpha + Market Beta + Currency – Tax – Fees
Maximize
Manage
Reduce
FORWARD-LOOKING ASSET MIXES
26
Price-Earnings Multiples
Based on 12 Month Forward Operating Earnings
26
TSX
S&P 500
24
24
22
22
Overweight US
20
20
18
18
16
16
14
14
12
12
10
10
Cumulative returns from
April 2011 to August 2013:
S&P/TSX -2.8%
S&P 500 C$ +40.4%
8
8
86
88
90
92
94
96
98
00
02
04
06
08
10
Bottom Up Earnings Based on CPMS (TSE) and IBES (S&P) Consensus
Source: TD Securities
12
14
DYNAMIC INCOME ASSET MIX TO ACHIEVE
SUPERIOR RISK-ADJUSTED RETURNS
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013Q
2
Target
Cash
12
15
21
21
27
34
24
0%
Government & Investment grade
debt
49
44
41
41
36
31
44
60%
High yield Corporate Bonds
21
22
19
18
15
13
12
20%
High-dividend Stocks
18
19
19
20
22
22
20
20%
Duration (years)
5.1
4.5
4.2
4.1
4.1
3.3
3.1
Weighting (%)
Represented by Portfolio Select Series: Select Income Managed Corporate Class [CIG 2265]
Source: CI Investments
ACTIVE SECTOR AND STOCK SELECTION
Sector Exposure Comparison
Financials
Energy
Materials
Industrials
Telecom Services
Consumer Discretionary
Consumer Staples
S&P/TSX Index
Portfolio Select Series
Health Care
Utilities
Information Technology
Cash
0%
5%
Source: CI Investments, Wilshire Associates. Data as of July 31, 2013
10%
15%
20%
25%
30%
35%
CURRENCY MANAGEMENT
ALSO SETS US APART
Canadian dollar (US$)
11.7% cumulative added value
1.10
10% hedged
1.00
30% hedged
30% hedged
0.90
50% hedged
0.80
70% hedged
0.70
Jan-08
Jan-09
Jan-10
Dynamic hedging introduced
Source: Bloomberg, CI Investments
Jan-11
Jan-12
Jan-13
INVESTMENT PROCESS
1. Income markets
Long-term Government of Canada bond yield
18
Implications:
• Low expected return:
~2% with 100% fixed income
16
14
12
10
•
8
6
4
2
0
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Average yield of Gov’t of Canada bonds with at least 10 years to maturity
Source: TD Securities
Increased volatility
and downside
INVESTMENT PROCESS
2. Power of multi-asset class optimization
Base case
25% equity
• higher expected return
75% cash
• lower volatility
INVESTMENT PROCESS
3. Add-on’s to cash
25% equity
currencies
high yield bonds
75%
investment grade
REITs
• further enhance returns &
diversification
• reduce volatility
• add-on’s to outperform cash
Select Income Managed - CIG 2265
INVESTMENT PROCESS
4. Add equity for longer-term horizons
Select Income Managed
+
Canadian
equity
U.S.
equity
EAFE
equity
EM
equity
SOLUTION FOR AN INVESTOR
Expected Return %
.
..
.
PE expansion
.
Gov’t
Bonds
GIC
For illustration purposes only; there is no guarantee on results
100e
40i60e
100i
Volatility
OUTLOOK: CANADA VS. U.S.
26
Price-Earnings Multiples
Based on 12 Month Forward Operating Earnings
26
TSX
S&P 500
24
24
22
22
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
Bottom Up Earnings Based on CPMS (TSE) and IBES (S&P) Consensus
Source: TD Securities
12
14
OUTLOOK: CANADA VS. U.S.
Real GDP Growth, Y/Y % Chg
GDP growth forecast
6%
4%
2014
2.0%
3.2%
Canada 1.6%
2.4%
US
2%
0%
-2%
Forecast
-4%
US
14:3
13:4
13:1
12:2
11:3
10:1
09:2
08:3
07:4
10:4
Canada
-6%
Source: CIBC
2013
OUTLOOK: BOND MARKET
Even though overnight rates have not changed,
bonds have been volatile
Government of Canada benchmark bond yields - 5 year
GRAPH PERIOD: 1 year ending Sep 10, 2013
Buying
Selling
Source: Bank of Canada
Thank You
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