The fourth quarter of 2018 was a difficult one for asset managers. Slowing global growth, trade tensions and fed policy caused significant stock market volatility, sending the TSX Composite TR Index down 10% for the quarter. 

 

The WealthCo medium-risk model portfolio was down just 2% over the same period, outperforming the index by more than 8%.

There are Alternative options for investors who are tired of experiencing consistent market volatility. 

Fourth Quarter 2018 - Fund Fact

Medium Growth Model Portfolio

WEALTHCO ASSET MANAGEMENT POOLED FUNDS

Quarterly Update - December 31, 2018

Inspired by the work done at many of the leading North American pension funds and endowments, WealthCo Asset Management offers portfolios that are rich in allocations to less-correlated assets and asset classes. We take our clients beyond the traditional 60/40 balanced portfolio. The intent of this approach to portfolio construction is to reduce volatility over time without curtailing the long-term appreciation potential of your assets. Our size and scale give us access to attractive real estate and private equity deals at preferential rates and lower costs.

3mo       6mo       12mo

-2.00%     0.12%     4.84%

Cash & Equivalents and Bonds 21.6%

CDN Equity 13.2%

Global Equity 20.0%

REIT's 1.3%

Credit Strategies 8.5%

CDN Mortgages 10.4%

US Mortgages 12.3%

CDN Real Estate 4.3%

US Real Estate 6.0%

Hedge Funds and Private Equity 2.4%

SINCE INCEPTION

6.62% ANNUALIZED

We understand that no-one likes to lose money, but WealthCo’s clients should be able to find comfort that our returns continue to demonstrate the benefits of a diversified, low volatility strategy. In particular, our allocation to alternative assets and investment grade fixed income helped protect our clients from the severe losses that others may have taken.

FIXED INCOME FUND

INCEPTION MARCH 30, 2018

Quarterly Update - December 31, 2018

We launched this fund at the end of Q1 2018, which entailed carving out the fixed income holdings that were previously held in the Core fund. The fund has a mandate to provide exposure to North American investment grade fixed income. We want to own high-quality government and corporate bonds with the intention to preserve capital and earn positive long-term rates of return. Adding this dedicated fixed income offering to the WealthCo family of funds will give us greater flexibility in designing our model portfolios.

39.4% Cash & Equivalents

35.8% Government Bonds

24.9% Corporate Bonds

ALTERNATIVE INCOME FUND

INCEPTION JUNE 30, 2014

Quarterly Update - December 31, 2018

This fund has a mandate to invest in alternative credit investments with the aim to earn superior rates of return versus what is anticipated to be available in the traditional bond market. Permitted investments include private mortgages, bonds issued by private organizations, and other interest-earning securities/vehicles. In our view, enhanced returns are more so a function of committing capital for a fixed duration than a willingness to accept high levels of credit risk. The target yield for this fund is 7%, which we have been able to largely maintain since its inception. Our private mortgage investments, especially those in the US, mean we can own higher-interest investments, which contribute to our ability to generate a yield in line [or above] the stated target.  

10.7% Cash & Fixed Income

29.8% CDN Mortgages 

35.2% US Mortgages

24.3% Credit Strategies

ALTERNATIVE GROWTH FUND

INCEPTION JUNE 30, 2014

Quarterly Update - December 31, 2018

This fund has a mandate to generate capital gains from private and non-traditional real estate investments, which are largely uncorrelated with public market returns. The fund also invests in a portfolio of REITs (real estate investment trusts), direct real estate holdings, private equity, hedge funds and other alternative strategies. Direct real estate investments typically focus on value-creating opportunities that include property development, building repositioning, and increasing operating efficiencies. Many of these investments have a lifespan of between two and five years so transactions within the fund tend to be a bit fewer and further between. There are attractive returns to be had, but we need to balance the appeal of those with the need to maintain adequate liquidity. For this reason, this fund tends to be the smallest allocation in our portfolios.  

7.0% Cash & Equivalents

8.5% REITs

28.7% CDN Direct Real Estate

39.9% US Direct Real Estate

15.8% Hedge Funds & Private Equity

CORE GROWTH & INCOME FUND

INCEPTION JUNE 30, 2014

Quarterly Update - December 31, 2018

This fund has a mandate to invest in North American equities of varying market capitalizations. The equity portion is sub-divided into four separate portfolios:  Canadian large-cap stocks, Canadian small-cap stocks, US large-cap stocks and US small-cap stocks. Across these segments there is a strong focus on acquiring investments in companies with proven business models, low-to-moderate leverage and/or the ability to pay dividends. This fund is invested entirely in liquid capital market securities and will generally constitute the most sizeable portion of any WealthCo portfolio. This ensures we have ample liquidity to satisfy any cash flow needs, as all holdings are frequently traded investments.

5.0% Cash & Equivalents

17.6% CDN Equity

20.2% CDN Small Cap

32.2% US Equity

25.0% US Small Cap

*Inception Date: In an effort to have our model portfolio representative of our continuing investment strategies there is a short adjustment in the inception date to accommodate portfolio development and the settling of private placements.

Our asset allocation decisions are aimed at protecting clients from downside volatility in capital markets, not outperforming markets. 

Moreover, it is our goal that with alternative assets and lower volatility strategies, we will avoid the emotion-driven sell decisions that can compromise long-term rates of return.

Download the Q4 2018 WealthCo Asset Management Fund Fact

AVAIL WEALTH PLANNING

At Avail, our commitment to continuously improve the experience our clients and community have with our firm is what sets us apart in our industry. 

 

Integrated Advisory is a wealth planning solution to help you reach your goals and objectives through a process that produces collaborative results.

 

The core focus is to integrate the areas of: Accounting, Financial Planning, Investing and Insurance, and is built on establishing clarity, delivering insight and executing strategies in collaboration with an integrated team of your professional advisors.

Will creating an integrated collaborative team of your trusted advisors bring value to reaching your goals and objectives for the future?

 

If the answer is yes, please feel free to start the conversation

Avail CPA   

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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.