Portfolio Design

Each mutual fund has an investment mandate which can be fairly broad allowing for investments in a variety of different asset classes or have a focused and specific mandate. The three basic asset classes are equities, fixed income and cash. Some funds will invest in a mixture of all of these, others will invest primarily in one of these asset classes.

The asset classes can be divided into sub-categories:

  • Fixed income assets include Canadian bonds and global bonds. Within the Canadian bonds category, there are Federal, provincial, municipal and corporate bonds.
  • Equities can be broken down by geography (Canadian, US and overseas), market capitalization (large cap or small cap stocks).
  • Portfolio management style, such as growth or value, top down or bottom up, momentum. 

Each asset class and sub-class has its own level of risk and volatility. By selecting a mutual fund or a portfolio of mutual funds that have broad, diversified mandates, the amount of volatility can be contained within a narrow range due to the different attributes of each class.

There are also restrictions on mutual funds in Canada set out by regulatory authorities, which limit the amount of exposure to any individual security. This helps to reduce the business risk of investing excessively in a single company.

A very important role for your financial advisor is to help you adopt the appropriate asset mix and help you put together a portfolio based on your own investment objectives and risk tolerance.

Our Assante Branch has a mutual funds rating committee which meets regularly to evaluate our recommended list of approximately 80 funds (3 to 6 in each asset category).  The four criteria that we monitor for each fund management group are:

People - Qualified, professional and motivated investment team.

Process - Explicit discipline followed by the investment professionals on a constant basis.

Performance - Reliable above-average performance relative to their peer group and relevant market indexes.

Service and administration - Accessible, knowledgeable and dependable.

 

 

 

 

Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.