Mutual Fund Portfolio Strategies Agenda • Investor’s dilemma… Why diversify? • Asset allocation - Why does it matter? • Asset allocation - How it works? • Asset allocation - Why it works? • Asset allocation - What it will do for you. • Why use a Financial Advisor?
Mutual Fund Portfolio Strategies Agenda. Investor’s dilemma… Why diversify? Asset allocation - Why does it matter? Asset allocation - How it works? Asset allocation - Why it works? Asset allocation - What it will do for you. Why use a Financial Advisor?. Yes. No!. Risk vs Return. - PowerPoint PPT Presentation
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Mutual Fund Portfolio Strategies Agenda
• Investor’s dilemma… Why diversify?• Asset allocation - Why does it matter?• Asset allocation - How it works?• Asset allocation - Why it works?• Asset allocation - What it will do for you.• Why use a Financial Advisor?
100% T-Bills100% T-Bills
ExpecteExpectedd
ReturnReturn100% Bonds100% Bonds
100% Equities100% Equities
Risk/VolatilityRisk/Volatility
Yes
No!
Risk vs Return
CombinationsCombinations
VOLATILITYVOLATILITY
RETURN
RETURN
HigherHigher
HigherHigher
LowerLower
GrowthGrowth
BalancedBalanced
ModerateModerate
ConservativeConservative
Historical Portfolio Risk vs Return
AggressiveAggressive
1. A profile 1. A profile Questionnaire calculates Questionnaire calculates your Risk Scoreyour Risk Score
3. Match to the 3. Match to the Asset Allocation Asset Allocation
Portfolio Portfolio RecommendationRecommendation
2. Match your risk 2. Match your risk score to your score to your portfolio’s portfolio’s Investment Investment ObjectiveObjective
Aggressive
Growth
Balanced
Moderate
Conservative
Asset Allocation InvestingMade Easy …
Investment Personality ?
• Current Net worth• Financial Goals• Investment Time Horizon• Needs for Liquidity• Safety / Risk tolerance • Retirement Income Need• Other Income Sources• Inflation Protection• Principle Protection
• Current Income• Taxation Priorities • Portfolio Review• Past Performance• Financial Statements• Existing Investments• Family Income Needs • Estate Preservation• Wealth Transfer
Asset Mix Universes
4%5%6%7%8%9%
10%11%12%13%14%15%
0% 2% 4% 6% 8% 10%
12%
14%
16%
18%
20%
22%
24%
Risk (Stdev)
Ann
ual R
etur
n (M
ean)
What will a balanced Asset Allocation do for you ? It will provide Good Long-term Performance !
Risk (Std. Deviation)
Asset Mix Universe
Max Frontier
Diversified Frontier
Asset Allocation Portfolio Mixes
Conservative
EquityFixed-Income
Equity100%
Equity60%
Fixed-Income
40%
Equity80%
Fixed-Income
20%
Equity20%
Fixed-Income
80%
Equity40%
Fixed-Income
60%
Aggressive Growth
Moderate
Balanced
Growth
Asset Class Best Funds Report
• Canadian equity• Canadian dividend• Income trusts• Canadian bonds• Short term bonds• Global bonds• US equity• International equity• Money market• Specialty funds• Sector markets
• AGF• Franklin Templeton• Elliott & page (Manulife)• Fidelity• AIC (buy, hold & prosper)• AIM Trimark• TD funds• Manulife / standard life• Big bank funds• Phillips Hager & north• Cartier partners• Ethical funds / credit union
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
Int'l Stocks US Stocks Can. Stocks Can. Bonds
Correlation… Why Does It Work?
Understanding Your Critical Portfolio Success Factors
Your existing financial situation
Your priorities & financial goals
Your investment timeline
Your risk tolerance
Optimal asset allocationAsset class investment selections Time in the market !Not timing the market!
Investment Selection Success Factors
Historically Successful Returns – ask why?
Consistent Top Quartile Rankings – ask why?
Asset Class & Volatility Expectations = Risk
How does it Compare against its own index ?
Best Funds Report for past 3, 5 & 10-yearsFront End Fees, Back End Fees, or No Load?RSP Eligible? Dollar Limits or Restrictions? Low MER or Principle Guarantees, if possible?Any Principle or Maturity Guarantees ?
Having your own certified financial planner …
Do you own mutual funds already?
Did you know that part of your MER is paid to someone?
Is this “someone” giving you the service you need?
Is this “someone” giving you the advice you need?
Is this “someone” giving you the respect you need?
Since you are already paying “someone” part of the MER
why not put your funds under your own control of who this advisor should be? … Someone who deserves it !
Samuel J. Esaw, CFP, CLU, CHFC
• Certified Financial Planner• Chartered Life Underwriter• Chartered Financial Consultant• Helping build, protect & preserve estates since 1985
• Served Lawyers with the Canadian Bar Association• Served Doctors with the Canadian Medical Association • Now serving you with unbiased & independent advice