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Portfolio Management

Proactive Portfolio Management

Smarter strategies that help adapt to ever-changing global opportunities and risks.

We are discretionary portfolio managers and we use a rigorous strategic and tactical asset allocation process to ensure clients are always properly diversified. The following is a summary of Fabien’s seven core investment planning beliefs & principles, which are expanded on below:

  1. Every client should have a basic financial plan completed before an investment strategy can effectively be recommended;
  2. Client’s risk profile must include an analysis of their risk tolerance and risk capacity;
  3. The initial financial plan and risk profile provides the necessary information needed to create an appropriate Investment Policy Statement (IPS), which clearly explains the client’s customized investment strategy;
  4. The management of asset allocation forms the basis of each investment plan, including tactical ranges for each asset class, enabling active allocation tilts as required based on market conditions;
  5. The active use of Exchange Traded Funds (ETFs) is encouraged, and forms the basis of regional, country and asset class allocations;
  6. The selection and management of individual stocks should be performed by individuals who are fiduciaries and who have access to advanced tools and processes within a discretionary environment, enabling the quick and efficient adjustments needed in today’s markets;
  7. We advocate the use of Technical Analysis, which should be used in concert with Fundamental Analysis when managing individual stocks.
Investment Planning

Innovative strategies to manage your personal and corporate finances.

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.

We’ll 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, we’ll combine it to your risk capacity obtained from your financial planning analysis, to arrive at your overall risk profile.

As fiduciaries and discretionary portfolio managers, we must clearly communicate to you the planned investment strategy we’ve constructed for you by drafting your Investment Policy Statement (IPS).  This important document establishes your personal investment portfolio’s blueprint which we’ll continually refer to as we 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 with us 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 our strategic asset allocation models which spans 11 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.  This strategic mix represents your neutral allocation.  We 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, we 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, we adjust the tactical tilts as needed, ensuring that we minimize your portfolio’s downside volatility when needed, and maximizing the upside volatility when possible and appropriate.  These shifts are not based on a calendar – we don’t re-balance on a quarterly or yearly basis – markets don’t work that way.  We re-balance whenever needed, based on the markets. Whether this is happens within in a week, a month, or several months is irrelevant to us; what matters is what the market is telling us.

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

We manage 4 portfolio models, made available to high net worth clients. Concentrating on the selection and management of Canadian and U.S. stocks, our model portfolios blend varied investment styles based on a quantitative approach to construct fundamentally distinct, equally weighted equity portfolios.

Our models include a stable Income model, a moderate Predictable Growth model, and a higher volatility Momentum model. We also combine these three styles 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 our models follow disciplined, clearly established rules, strict buy and sell parameters, and daily review of updated fundamental changes to a corporation’s reported financials. I strongly believe that by maintaining this disciplined approach, we effectively minimize the negative behavioral issues often associated with equity investing. Our specialized quantitative tools enable us 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, we then use technical analysis to further extract the best 30 stocks for each model.

As fiduciaries and portfolio managers, we’re able to quickly adjust our holdings using our advanced tools and methodologies, which automatically flows down to each of our client accounts based on their custom model exposure.

Fabien is a conscientious, trustworthy individual that is very knowledgeable and highly skilled in the area of personal investments. He is able to discuss comprehensive investment strategies in a simple yet precise fashion. His knowledge base is very clear when you talk with him and he gives me great confidence that I am dealing a very competent individual.
Dr. David Jordan
Surgeon

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