Portfolio Management

When you hire us, we begin by completing a preliminary financial planning analysis to learn about you, our new client. This helps us determine how your investment portfolio fits with your ultimate goals.  We’ll analyze your overall net worth, cash flow, tax position, and liquidity needs.  This is not a full Financial Life Plan – that’ll be provided to you after the portfolio is properly invested.  This initial analysis is limited in scope – it starts with a basic net worth analysis to understand your overall estate structure, including what the total portfolio value represents in percentage terms to your net worth, which impacts the level of risk you can take. We’ll also draft a cash flow analysis to assess your various income sources, marginal and effective tax rates, income and liquidity needs in the short and medium term, and your overall expenses relative to your net cash flow.  The above analysis establishes your risk capacity.

Your Portfolio Manager will perform a thorough risk tolerance analysis by using psychometric testing. Psychometrics blends psychology and statistics. It is a scientific discipline for testing personal characteristics such as risk tolerance. Psychometrics sets international standards for both the development of tests and for evaluating the qualities of tests. Once your risk tolerance is assessed, your Portfolio Manager will combine it to your risk capacity obtained from your financial planning analysis, to arrive at your overall risk profile.

Your Portfolio Managers are fiduciaries and must clearly communicate to you the planned investment strategy they constructed for you by drafting your Investment Policy Statement (IPS). This important document establishes your personal investment portfolio’s blueprint which they’ll continually refer to as they manage your investments in the coming year, or until a new IPS is drafted, whichever comes first. A new IPS is required at the start of your relationship and updated when there is a significant change in your overall financial situation or risk profile that warrants an adjustment.

The choice of asset class weightings is based on Q Wealth’s strategic asset allocation models which spans 5 risk profiles. Each model has an expected level of risk and return based on historical and statistical analysis. Your risk tolerance and capacity will be matched to the appropriate strategic asset allocation model by your Portfolio Manager. This strategic mix represents your neutral allocation. Add to this a minimum and maximum range for each asset class, partly based on your risk profile and the particular asset class. These ranges are used when tactical shifts are needed based on market conditions. For instance, a Portfolio Manager may temporarily underweight a particular asset class down to its minimum range when it’s overvalued, while at the same time increasing the exposure of an undervalued asset class to its maximum range. As markets adjust, the tactical tilts may be adjusted as needed, ensuring that your portfolio’s downside volatility is minimize when needed, and upside volatility is maximized when possible and appropriate. These shifts are not based on a calendar – rebalancing doesn’t happen on a quarterly or yearly basis – markets don’t work that way. Rebalancing occurs whenever needed, at the discretion of the Portfolio Manager, based on the markets. Whether this happens within in a week, a month, or several months is irrelevant to us; what matters is what the market are doing.

The use of Exchange Traded Funds (ETFs) for various country, sector, asset class, or style allocation allows your Portfolio Manager to minimize trading costs, which in turn maximizes your portfolio returns. Day to day trading in ETFs is based on the above reallocation needs resulting from the active tilts that may be required. Your Portfolio Manager maintains an often-adjusted inventory of ETFs chosen from extensive research and regular monitoring to ensure that the best ETF for your particular needs are used.

Q Wealth Partners offers 4 portfolio models, made available to high-net-worth clients. Concentrating on the selection and management of Canadian and U.S. stocks, the Portfolio Managers use model portfolios to blend varied investment styles based on a quantitative approach to construct fundamentally distinct, equally weighted equity portfolios.

The models include a stable Income model, a moderate Predictable Growth model, and a higher volatility Momentum model. These three styles are combined into a 4th model, selecting only the top 10 stocks from each into a well-balanced multi-style portfolio of 30 holdings, effectively reducing overall risk while maximizing returns.

All models follow disciplined, clearly established rules, strict buy and sell parameters, and daily review of updated fundamental changes to a corporation’s reported financials.

The Portfolio Managers strongly believe that by maintaining this disciplined approach, they effectively minimize the negative behavioral issues often associated with equity investing. The specialized quantitative tools enable the Portfolio Managers to construct filters for a plethora of fundamental variables to extract the best possible basket of stocks based on special blend of criteria. Each model includes High, Moderate and Low impact variables. More weight is placed on High Impact variables, and less weight is placed on Low Impact variables. Once a basket of high-quality stocks has been ranked based on its specific style, technical analysis is used to further extract the best 30 stocks for each model.

With your Q Wealth Partners Portfolio Managers being fiduciaries, they are able to quickly adjust holdings using advanced tools and methodologies, which automatically flows down to each of our client accounts based on their custom model exposure.