Catchy headlines got you sidelined?

2019 has not been short of catchy headlines. Negative interest rates, QE infinity, trade wars, real wars, de-globalization, recession predictions, impeachments and endless other Trump tweets have kept investors entertained while their portfolios grew steadily over the first nine months of the year.  Public markets have done well, with the S&P 500 sitting near the 3,000 -level again; and bond yields falling to the lowest levels we’ve seen in years. So far, investors have responded to increasing risks in public markets by reaching for yield and safe-haven assets.  This shift has led to rich valuations in defensive sectors like REITs, Utilities and Gold; forcing some asset managers to the sidelines.  


We’re not sitting on the sidelines. We continue to see strong deal flow in private markets: in just the past three months we have added new holdings in the Canadian mortgage lending sector, the private credit market, and a technology private equity investment.

Third Quarter Highlights

  • Our public equities fund generated strong returns year-to-date (+12%), with Canadian large-cap stocks leading the way (+18%), followed by US mid-caps (+17%).  

  • Falling yields and tighter credit spreads generated strong returns in fixed income year-to-date too (+4%).  We continue to hold mostly higher quality investment grade credits with shorter duration.  

  • We made our first investment in the CMLS Mortgage Fund in September. With $22 billion of mortgages under administration, CMLS is one of Canada's largest independently owned mortgage services companies. The fund invests in mortgages on single family homes and commercial real estate across Canada and has generated a 6.4% return since inception.  CMLS gives us access to broader deal-flow in the Canadian mortgage market and complements our existing mortgage holdings.


  • Three mortgages in the U.S. were paid out early over the summer. The proceeds were mostly reinvested in mortgages on income-generating properties, including an industrial business park in Hamilton, ON, and a multifamily residential property in midtown Toronto, ON. 

  • In addition to mortgage investments, we extended a secured loan to a private real estate trust in Q3. The trust currently holds 17 properties across North America. 

  • We revalued our Calgary real estate holdings In Q3, with mixed results. The Britannia Block LP was revalued lower due to poor market fundamentals, time slippage, and cost overruns; however, the losses were partially offset by net unrealized gains on our 17th Avenue SW and US real estate holdings.  

  • We made our second investment with iNovia in Q3. Recall, iNovia is a technology private equity manager focused on growth stage companies in the Information Communications Technology sector (see Q1 2019 commentary).

Sitting on the sidelines can be a costly strategy


We read the headlines too, but we try not to get caught up in them. We believe in sticking to your long-term asset allocation and actively managing portfolios; not moving to the sidelines because of a tweet. Further, consistent with our diversification philosophy, we recommend always having a meaningful exposure to the public equity and fixed income markets, supplemented with a significant allocation to alternative assets. Our clients have roughly a 45% allocation to alternative assets, which we expect to remain fairly constant over time. As for public markets, we remain fully invested because sitting on the sidelines can be a very costly strategy. In fact, JP Morgan recently calculated that over the past 20 years, if you missed the 10 best days in the market your returns would be 64% lower than if you were fully invested throughout.

Our returns reflect our commitment to provide equal opportunities to investors. 



Artboard 1.png

Avail CPA   I   Claresholm, Fort Macleod, Lethbridge, Milk River, Pincher Creek, Taber, Vauxhall

All Rights Reserved 2019-2020   I   Powered by WealthCo

WealthCo. Asset Management Inc. (“WealthCo”) is registered as an Exempt Market Dealer in the provinces of Alberta, British Columbia, Manitoba, Saskatchewan and Ontario.  It holds a Portfolio Manager registration in the provinces of Alberta, British Columbia, Manitoba, Northwest Territories and Saskatchewan and an Investment Fund Manager license in the province of Alberta. The information provided herein is for general information purposes and should not be construed as an offer to purchase, sell or trade in securities.  Important information regarding the WealthCo funds discussed herein is set out in the fund’s offering memorandum.  A copy can be obtained from info@wealthco.ca.These S&P index returns are shown because they are widely quoted and are provided for general information purposes only.  They may not be a fair comparison to the WealthCo Fund because the investment universe and risk profile of the two portfolios differ.  The historic returns and their relative performance shown above may not be indicative of future returns.  Performance cannot be guaranteed. Medium Risk Model Portfolio: The returns set out above reflect a money weighted average of the returns of all clients invested in a medium risk model portfolio during the investment period shown. The actual result of a portfolio invested under this risk category may deviate from the composite because of differences in the composition and type of assets held.  The performance of the TSX/S&P has been provided for general information purposes only.  It may not be a fair comparative to the composite return because the types of securities in the index and the index’s overall market risk differs from the composite. Model Portfolio: This asset mix set out herein reflects the composition of a typical medium risk portfolio as at 09/28/18. The composition of an actual portfolio may vary from the composite, and the asset mix of the composite may vary over time.