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Pandemic revealed benefits of stock-picking – Investment Executive



“Our [portfolio] managers deployed some cash in March to buy really good names at discounted prices,” said Sanjiv Juthani, head of product management at Manulife. The firm focuses on bottom-up stock-picking and “even with the potential for short-term market pain, our managers don’t make macroeconomic bets,” Juthani said.

When Covid-19 hit, no one knew what the markets would do. “Equities could have gone down by 50%, up by 50% or anywhere in between,” said Paul Moroz, chief investment officer at Calgary-based Mawer Investment Management Ltd., which had 80.4% of its AUM in funds with above-average returns.

The S&P 500 composite index lost about a third of its value in late February and March 2020, but half of that loss was erased in three weeks. The index ended 2020 up by 16.3%.

Following Manulife were Fidelity Investments Canada ULC (with 83.6% of AUM held in funds with above-average performance), RBC Global Asset Management Inc. (80.6%), Mawer (80.4%) and Mackenzie Investments (77.9%). All took advantage of the bargains during the March plunge.

Mawer, ranked fourth, stands out: over the past seven years, the firm had an average of 79.8% of its AUM in funds with above-average performance. That’s more than 10 points higher than RBC (67.3%), Fidelity (64.6%) and Manulife (63.6%) — even though Mawer is a much smaller shop.

Near the other end of the spectrum, IG Wealth Management Inc. had 25.1% of AUM in funds with above-average performance.

Here’s a look at some of the mutual fund families in more detail:

Manulife Investment Management’s. Juthani said Manulife’s managers were already well positioned to weather the storm, with their focus on downside protection, a well-diversified lineup of products and their bottom-up stock-picking.

Some of Manulife’s picks since March included Canadian Pacific Railway Ltd. and Thermo Fisher Scientific Inc., a scientific product manufacturer based in Massachusetts. Demand for both companies’ products and services increased during the pandemic, Juthani said.

The Manulife Dividend Income Fund did extremely well, with a return of about 22% for the year — an example of how active investment management can add value. The dividend fund has a 50% U.S., 50% Canada mandate and held $7 billion in AUM as of Dec. 31. In March, the fund added holdings. Although most holdings pay dividends, the fund has flexibility and benefited from the sharp rise in non-dividend-paying Inc., up by 76%, and Ottawa-based Shopify Inc., up by 227%.(All individual stock returns are from Mar. 20 to Dec. 31.)

Juthani was surprised at how quickly markets recovered, particularly given other investor concerns, including the U.S. election and Brexit. He said he anticipates continued gains in equities but also volatility, given the uncertain timing of vaccine rollouts.

Fidelity Investments Canada. “Our managers tend to perform well in volatile markets where information is scarce — and they found lots of opportunities in March,” said Kelly Creelman, senior vice-president of products and marketing.

The Fidelity Global Innovators Class fund did particularly well, with a return of 95% for 2020. Strong holdings included Roku Inc., a California-based streaming service that was up by 336%, and Tesla Inc., up by 725%.

In the Canadian-focused small- and mid-cap equity space, the Fidelity Greater Canada Fund returned 55% in 2020. Its holdings included Brookfield Renewable Partners LP, up by 99%.

Another good pick by Manulife managers was Carvana Co., a U.S. online used car dealer, up by 716%.

RBC Global Asset Management. “In a year where massive divergences existed between winners and losers of the pandemic era, stock-picking was able to add significant value to our equity portfolios,” said Dan Chornous, chief investment officer. The RBC Global Equity Focus Fund and the RBC International Equity Fund had returns of around 25% and 20% in 2020, respectively, “driven mostly by security selection.”

Chornous noted that U.S. large-cap growth stocks outperformed as work-from-home measures benefited mega-cap technology stocks, pushing growth stocks to their highest relative levels since the technology bubble of the late 1990s. Since the November vaccine announcement, there’s been a shift toward smaller-cap, value and non-U.S. equities, Chornous said. But he warned that investors are “extremely optimistic and valuations are already stretched by some measures,” which could lead to a pullback.

Mawer Investment Management. Moroz said that in 2020, risk management “didn’t pay.” In other words, if you held risky stocks, you may have done really well.

Mawer prepared for two scenarios after Covid hit: a depression or enough fiscal and monetary stimulus to keep the economy from plunging. When the latter materialized, the firm’s holdings in “quality but boring stocks that make money” worked well, Moroz said.

Moroz pointed to two stock picks: Italy-based Recordati Industria Chimica e Farma SpA, up by 30%, and Softcat PLC in the U.K., up by 51%. Recordati is a specialized drugmaker, and Softcat provides hardware and software for small and medium-size businesses.

Mackenzie Investments. “It was an extraordinary and challenging year, which makes me all the more proud of our results and our ability to generate good returns without over-reliance on big-cap tech,” said Kristi Ashcroft, senior vice-president and head of product. She credited Mackenzie’s performance to the firm’s research process and focus on risk management.

Many of Mackenzie’s portfolio managers are bottom-up stock-pickers. One pick that did particularly well is U.S.-based Synopsys Inc., which supplies tools to the global semiconductor industry. Its price rose by 136%.

Ashcroft is a big proponent of the need to diversify risk in portfolios and to look for opportunities everywhere: in emerging markets, private credit and equity, and through thematic investments in areas such as energy transformation.

Dynamic Funds. This fund family ranked seventh in 2020, with 69.8% of AUM held in above-average funds.

Neal Kerr, president of Dynamic Funds, was surprised by how fast equities dropped — and how fast they rebounded. The experience underscored that trying to time financial markets is difficult and doesn’t work very often. “Most [retail] investors would have gotten out too late and wouldn’t have got back in quickly enough,” he said.

Dynamic’s fund family’s success was helped by more exposure to U.S. equities than Canadian and international equities. The fund family also had more exposure to technology and less to energy.

Kerr said 2021 could see more success from value stocks, which have “substantially lower” earnings multiples than growth stocks. But he also emphasized the importance of having portfolios diversified by investment style as well as geography.

Franklin Templeton Investments. This fund family’s performance was middling, with 51.1% of AUM held in above-average performing funds. But this was a marked improvement from 2014–19 results, during which Franklin Templeton averaged 33.5%.

The company’s success is partly due to introducing funds with different strategies. Duane Green, president and CEO of Franklin Templeton Investments Corp., said the acquisition of U.S.-based Legg Mason by the firm’s U.S.-based parent, Franklin Resources Inc., on Jul. 31, 2020, will accelerate Franklin’s improvement.

Green said the Franklin Global Growth Fund had a return of 35%, fuelled by strong stock selections, including Zscaler Inc., a U.S.-based cloud network security company (up by 272%); MercadoLibre Inc., an Argentina-based online marketplace (up by 270%); and Shopify.

Green said 2021 should be another positive year for North American equities. He said value stocks might do a little better, but doesn’t expect a massive switch.

IG Wealth Management. The company’s strategy is to migrate clients to low-fee fund series, which have unbundled pricing. An IG spokesperson said the analysis used for this article, which looks at the overall AUM held by a fund only, underestimates the IG fund family’s performance.

Click image for full-size chart

How mutual fund families performed last year

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Is investing in crowdfunded real estate a wise choice? –



This column is an opinion by Mark Ting, a partner with Foundation Wealth who helps clients reach their financial goals. He can be heard every Thursday at 4:50 p.m. on CBC radio as On the Coast’s guide to personal finance. This column is part of CBC’s Opinion section. For more information about this section, please read our FAQ.

The high cost of real estate is often cited as the main barrier to entry into Vancouver’s housing market. As a result, some determined Canadians have turned to crowdfunding.  

In North America, there are several real estate crowdfunding companies that divide investable properties into fractional shares. I recently bought a fractional share of a rental development in Mission, B.C. This project’s crowdfund goal was $500,000 consisting of 500,000 shares at a dollar each.   

In total, about 1,000 people invested an average of nearly $500 to raise the half million. It is a longer-term holding with the developer building 105 units which include 11 affordable rental units over the next two years, then renting them out for three years before selling the units and dividing the profits among the investors.  

The reason I got involved in the Mission rental property crowdfund was two-fold. First, I agree with the crowdfund procurement team’s assessment about Mission — it has great capital appreciation and rental income potential — and second, I’m using this investment as a learning experience for my children.  

Investors need to make sure they know what fees they are paying for crowdfunded real estate, says Mark Ting. (Shutterstock/Roman Makedonsky)

A learning experience 

For every ‘A’ my kids earn at school on their report cards, I give them $100. This year they decided to invest their earnings in real estate via crowdfunding. We chose the Mission project as it is local, which means we can visit the development, monitor its progress and experience, albeit in a small way, the sense of pride that often accompanies home ownership.

On behalf of my children, I invested $500 in the crowdfund which projects an annual return of 14 per cent. In dollar terms, if achieved, our investment would double in about five years. Yielding $500 in five years isn’t going to dramatically change my life, however, for my kids it’s likely to be much more impactful. My hope is that they continue to invest the money they earn for good grades into more projects, essentially building a small pipeline of investments with different risk profiles that pay out at different times. My goal for them is to form good financial habits which, if accomplished, is worth several times more than the potential $500 profit created by this investment.

Some funds involve developers building a project and then renting out units. (Evan Mitsui/CBC)

When doing due diligence on crowdfunding, pay attention to the fees. Many offerings, in my opinion, overcharge or take an excessive cut of the profits. Before I invested, I compared the fee structures of various crowdfunding companies and ultimately went with a company that didn’t charge fees but instead were compensated via a subscription model. 

To participate in the Mission development, I had to first pay $25 for an annual subscription. Something to consider if you are only planning on making a small investment. For example, it doesn’t make financial sense to pay a $25 annual subscription fee if you only plan to invest $100 into a project. Aim to invest at least a couple hundred dollars —ideally a couple thousand dollars, into various projects throughout the year. 

Other factors to consider:

  • The crowdfunding company’s management team experience and track record.

  • The minimum investment amount which can be range from $1 to more than $250,000. 

  • The expected returns of the investment versus the risk of the project.

  • The time horizon of the project which usually ranges from two to five years and more.

Overall, I feel that real estate crowdfunding can be a viable tool for those who want to invest in real estate but are restricted due to a lack of money or credit. Small investments in multiple projects add up over time. That makes it appealing for young people who want to get in the habit of investing — which now can be done in real estate for as little as the cost of a daily cup of coffee.

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Breaking Down The Barriers Preventing Millions From Investing In Companies That Do Good – Forbes



In the age of sustainability impact investing and ESG (Environmental, Social, and Governance), the non-financial factors that investors apply to identify material risks and growth opportunities, have become buzz terms. But not for everyone. According to research from new investment fund manager DUGUUD, this industry jargon leaves many people mystified and this is holding them back from investing in businesses that help the environment and society.

The survey of 3,000 adults found that just 10% were aware of the term impact investing and could explain it, yet when it was explained to them 60% agreed that it could create positive change in the environment and society. And three times more people agreed than disagreed that if they had funds to invest, they would want to invest in this area.

“It’s time for the whole financial services industry to ditch terms like impact investing and ESG and to start talking in a language everyone can understand,” says DUGUUD’s CEO and serial entrepreneur David Scrivens.

DUGUUD, the trading name of Amberside Capital, is an FCA-regulated fund manager launched this month, with a focus on climate change, increasing biodiversity, improving public health, reducing inequality, and improving education. It was born out of a need to create a platform that allows the general public to invest in companies that make a genuine and positive difference to the world.

“It is difficult and costly to create a fund that’s open to the public, and it takes a lot of marketing spend to reach them,” says Scrivens. “Most fund managers get institutional investors, such as pension funds, to meet the minimum investment level required to launch a fund, but this route is often to the exclusion of the general public.”

The research also revealed a significant level of cynicism, with 58% of respondents of the opinion that most businesses claiming to be doing good are actually spending more time and money marketing their environmental and societal intentions than on taking tangible actions. Two-thirds (67%) also agreed that there are now so many businesses claiming to run their business in a way that is better for the environment and society that they find it difficult to trust the real impact of most of their claims.

“It is extremely difficult to prove environmental and social change, and comparing organizations is also tricky,” says Scrivens. “There is no easy solution to this without government intervention to create tools for measuring impact.”

However, he insists that DUGUUD will not allow the companies it invests in to focus on just the one area of good they may be doing, but will hold them to account for all aspects of their business. They will also show investors tangible examples of what companies are doing, for example, how the company has moved to greener energy, not just by paying an electricity supplier to certify that they are getting green energy when it just comes through the grid, but by building additional green energy generation.

The team has already invested in several projects, including £17 million in Sterling Suffolk, which produces tomatoes in what has been dubbed ‘Europe’s cleverest greenhouse’. The semi-closed hydroponic glasshouse is considered 25% more energy efficient than a traditional one and allows for greater carbon absorption, and potentially creates better-tasting crops.

Wildanet is a Cornwall-based fiber company aiming to bring much-needed high-speed internet to rural communities in the region to improve digital inclusion. DUGUUD has raised the company around £50 million to help them achieve this goal.

Other investments include Virti, which trains medical staff remotely using virtual reality, and which has been incredibly valuable during the pandemic, and Ateria Health, which has developed a way to improve gut bacteria in humans that could help with common issues such as irritable bowel syndrome.

Another key finding of the research was that 67% of adults who were asked about investing would expect independent financial advisors (IFAs) to understand this area and supply options as part of the funds they discuss with customers, while 59% would also expect any pension provider to consider these kinds of investments in how they manage, invest and report on the pension fund.

This highlights the role that IFAs and pension firms have to play in creating more clarity for their clients around investing for positive change. “We believe that all professionals should be helping to spread the word about investing to make an improvement for society, and we aim to work with as many of them as possible,” says Scrivens.

Looking ahead, the plan is to create a fund that draws on the investment team’s infrastructure experience to make larger environmental and social projects come to fruition, and to launch a science-based fund focused on investment in technologies that can make a huge difference to the planet or society, but preferably both.

Scrivens adds: “We are also considering whether to offer a small part of our own company for individuals to invest in so that people can join us on our journey to make a real positive difference and help more companies that do good get the investment they need.”

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The best investment I ever made – Shreveport Times



I started in the investment advisory business in January 1987. My timing was great as I experienced my first “market crash” in October of that year. Today that correction in the market is barely a blip on the screen. I was numb to bumps in the road at that stage in my life. Having just spent 6 years at an aggressive independent oil and gas company had prepared me well – especially when they turned the lights out on the entire industry in 1986.  I found myself “earning” $205/week on unemployment! It was a very inspirational time during which many of us reflected on our professional future. Regardless of the events of 1987, it was one of those character building periods that added to my survival instincts.

As my title above suggests, I’m frequently asked my opinion regarding this investment or that opportunity in which they (or more likely, their friend) might pursue their fortunes.

True confession: It seems all the “good stuff” always eluded me. No one ever even approached me with any of the local scams that sounded awfully good at the time and sent some folks to jail. Apparently, I was “out of the loop” on the juicy deals. Full disclosure, some dear friends of mine did offer to have me join them in Tulsa to form a new oil and gas company.  I declined. They did get rich and built and sold numerous oil and gas companies. Not even Warren Buffett gets it right every time!

One more aside, before I answer the question about my “best investment”! I have had what I consider to be real success with some of those filthy, dirty, expense laden variable annuities. Due to a selection heavily into their stock sub-accounts they have outperformed most of the popular indices. If the bottom ever falls out, I sleep well knowing their guarantees will pay me for life. Other than that, just because you might be curious by now, I’ve found comfort with Exchange Traded Funds and Mutual Funds managed by my Harvard/Stanford educated, brilliant friend and partner in Birmingham, Rick Wedell. He’s the best! Not to be out done, I also cling to a group of blue-chip, high-dividend paying stocks I lucked out and bought last year on March 20th – three days before the market hit the bottom. I promise, it was luck – not great timing on my part. At those low prices the dividends were just so high I couldn’t resist any longer.

My best investment, however, was in a little-known guy named Tommy Williams. In 1997 I formed a totally unknown company aptly called Williams Financial Advisors. That was accomplished with the guidance and advisory contribution of more mentors than I can name in this writing. I dove headfirst into the world of entrepreneurship. Along the way I established key relationships with the best (in my opinion) broker/dealer in the country, some wonderful and supportive clients, and ultimately some very bright – and much younger – partners. That next generation ultimately, over time, bought bits and pieces of the firm.  One day in November of 2020 they asked me what I wanted to do with my furniture! It was a real win-win and my wonderful desk, credenza, etc. are still in storage awaiting something… To anyone reading this who asks for advice due to their similar role in a startup venture I would say this. You already know all the cliches – never give up, work hard, try to establish a win-win with everyone you come across, don’t burn bridges, etc., etc. But you may not be thinking about valuation. That is, the value of your enterprise to a successor(s). I was fortunate – I had that type of advice years before and it changed the way I viewed the Company – thus creating enterprise value and becoming my best investment ever! Only in America. I’d recommend an investment in yourself to anyone.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal.

RFG Advisory and its Investment Advisor Representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professional for guidance on such matters.

Visit us at Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered by Registered Representatives through Private Client Services, member FINRA/SIPC. Advisory products and services offered by Investment Advisory Representatives through RFG Advisory, a Registered Investment Advisor. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.

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