“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 Amazon.com 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
This investment mix beats the S&P 500 — by a mile – MarketWatch
This article is the core of my best advice for long-term investors. If you want the very best equity portfolio, you’re about to learn what it is and how to put it together.
This article has three parts. The first is what might be called an “executive summary” of key points. The second outlines the step-by-step process of creating my recommended portfolio. The third digs deeper into a few related topics.
This is one of a series of articles I’ve written and updated annually for many years. Together, they outline a lifetime wealth accumulation strategy for do-it-yourself investors.
The other articles will tackle how to accumulate investment savings, how much to hold in bonds, and how to plan retirement withdrawals.
“Ultimate” isn’t a term to toss around lightly. But in the case of the ultimate buy-and-hold strategy, it fits. I believe this is the absolute best way for most investors to achieve long-term growth in the stock markets.
This strategy is based on the best academic research I can find — and it is the basis of most of my own investments.
Here are some key takeaways:
Because nobody can know the future of investment returns, massive diversification gives investors the highest probability for long-term success.
Most investors rely almost exclusively on the S&P 500
But by adding equal portions of nine other equity asset classes, long-term investors can double or even triple their returns.
The additional return comes primarily from taking advantage of long-term favorable returns of value stocks and small-cap stocks. Taking this step involves only minimal additional risk.
The ultimate buy-and-hold portfolio works best for investors who don’t want or try to predict the future, time the market’s inevitable swings or pick individual stocks.
By investing in passively managed index funds or exchange-traded funds, this strategy offers investors a convenient, low-cost way to own thousands of stocks.
This “ultimate” all-equity portfolio automatically takes advantage of stock-market opportunities wherever they are.
It’s best to roll this out in steps so you can see how it goes together. To help you follow along, here’s a table showing the components.
The base “ingredient” in this portfolio is the S&P 500, which is a good investment by itself. For the past 51 calendar years, from 1970 through 2020, the S&P 500 compounded at 10.7%. An initial investment of $100,000 in 1970 would have grown to nearly $18 million by the end of 2020. Keep that figure in mind as a benchmark to see the results of the diversification I’m about to describe.
For the sake of our discussion, think of the S&P 500 index as Portfolio 1.
The next step involves shifting 10% of your portfolio from the S&P 500 to large-cap value stocks, which are regarded as relatively underpriced (hence the term value).
This results in Portfolio 2, which is still 90% in the S&P 500. Assuming annual rebalancing (an assumption that applies throughout this discussion), the 51-year compound return rises from 10.7% to 10.9%. That would turn $100,000 investment in 1970 into $19.4 million.
In dollars, this simple step adds nearly 15 times the amount of your entire original investment of $100,000 — the result of changing only one-tenth of the portfolio. If that’s not enough to convince you of the power of diversification, keep reading.
In Portfolio 3, we move another 10% into U.S. small-cap blend stocks, decreasing the weight of the S&P 500 to 80%.
This boosts the 51-year compound return to 11%; an initial $100,000 investment would grow to $20.7 million — an increase of nearly $2.8 million from Portfolio 1.
To create Portfolio 4, we move 10% of the portfolio into U.S. small-cap value stocks, reducing the weight of the S&P 500 to 70%. Small-cap value stocks historically have been the most productive of all major U.S. asset classes, and they boost the compound return to 11.4%, enough to turn that initial $100,000 investment into $24.4 million — with more than two-thirds of the portfolio still in the S&P 500.
To continue diversifying, we create Portfolio 5 by shifting another 10% into U.S. REITs funds. Result: a compound return of 11.4% and an ending cash value of just under $25 million.
I understand that many investors are uncomfortable with international equities. But I believe any portfolio worth being described as “ultimate” must venture beyond the U.S. borders.
Accordingly, to create Portfolio 6, we shift another 40% of the portfolio to four more important asset classes: international large-cap blend stocks, international large-cap value stocks, international small-cap blend stocks and international small-cap value stocks.
This reduces the influence of the S&P 500 to 20%. The result is a compound return of 12% and a 51-year portfolio value of $32.4 million — an increase of 81% over the S&P 500 by itself.
The final step, Portfolio 7, comes from adding 10% in emerging markets stocks, representing countries with expanding economies and prospects for rapid growth.
This boosts the compound return to 12.4% and a final value of $34.4 million.
This massively diversified 10-part portfolio is as far removed as possible from any effort to predict the future. Over 51 calendar years, it met all the asset-class predictions of academic researchers—and more than doubled the dollar return of the S&P 500.
Here are my specific recommendations:
|Asset class||Recommended ETF (ticker)|
|Standard & Poor’s 500 Index||AVUS|
|U.S. large-cap value||RPV|
|U.S. small-cap blend||IJR|
|U.S. small-cap value||AVUV|
|U.S. real-estate investment trusts||VNQ|
|International large blend||AVDE|
|International large-cap value||EFV|
|International small-cap blend||FNDC|
|International small-cap value||AVDV|
Unfortunately, this portfolio has an important drawback: It requires owning and periodically rebalancing 10 component parts. Relatively few investors have the time or inclination to do that.
Fortunately, we have devised a four-fund alternative that’s much easier to implement.
Since 1970, this “lite” version of the ultimate buy and hold strategy would have produced virtually the same compound return, dollar return and standard deviation as the 10-fund portfolio I outlined above.
In an upcoming article, I’ll roll out this new version.
It won’t surprise you to learn that there’s much more to say about this portfolio.
In 2020, we recalculated results from the 1970s to reflect new data we did not have in previous years. We also changed our assumptions about fund expenses that investors would have been charge in the 1970s. We believe our recalculations will better reflect what 21st century investors can reasonably expect.
Yet even after all these calculations, the returns did not change materially, and there’s no change in my beliefs or recommendations.
This updated data is as good as I can make it.
To learn more about these changes as well as some other reasons I think so highly of this portfolio, I hope you’ll tune in to my latest podcast.
Richard Buck contributed to this article.
Paul Merriman and Richard Buck are the authors of We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement.
Manulife Investment Management Announces Reduction of Management Fees on Three Mutual Funds and Three Upcoming Fund Terminations – Canada NewsWire
C$ unless otherwise stated TSX/NYSE/PSE: MFC SEHK: 945
TORONTO, Feb. 25, 2021 /CNW/ – Manulife Investment Management announces a reduction of management fees on three global equity funds and the termination of three mutual funds. These changes will help streamline our platform of actively managed investments and further our commitment to offering diverse, strong-performing products to help investors achieve their goals.
Reduction of Management Fees
A reduction of management fees on the following series of three mutual funds will be effective on or about March 1, 2021:
Existing Management Fee (%)
New Management Fee (%)
Manulife Global Equity Class
Advisor Series/ Series T
Series F/Series FT
Manulife Global Thematic Opportunities Fund
Advisor Series/ Series T
Series F/Series FT
Manulife Global Thematic Opportunities Class
Advisor Series/ Series T
Series F/Series FT
It is expected that the reduction in management fees should have a corresponding impact on the management expense ratio of the funds over time.
“Delivering the best value possible to Canadian investors is a priority for us,” said Leo Zerilli, Head of Wealth and Asset Management, Canada. “Our team constantly monitors our fund lineup and identified an opportunity to improve our pricing on certain products within the global equity category.”
Effective on or about June 28, 2021, Manulife Investment Management will terminate the following funds and distribute the proceeds to securityholders of record on that date. The planned terminations include:
- Manulife Fundamental Dividend Class
- Manulife Global Dividend Growth Class
- Manulife Global Real Estate Unconstrained Fund
Prospectus qualified securities of the terminating funds will no longer be available for new purchases effective as of 4 p.m. ET on March 3, 2021. This includes purchases through automatic investment services such as pre-authorized chequing plans or automatic rebalancing services. Impacted investors are encouraged to contact their advisor to discuss the financial and tax implications of these fund changes and to discuss options, including how to switch their assets to another Manulife mutual fund that best meets their individual investment needs and circumstances prior to the termination date.
About Manulife Investment Management
Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 17 countries and territories. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We’re committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement.
As of December 31, 2020, Manulife Investment Management had CAD$966 billion (US$758 billion) in assets under management and administration. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.
Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Canada, Asia, and Europe, and primarily as John Hancock in the United States. We provide financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions. At the end of 2020, we had more than 37,000 employees, over 118,000 agents, and thousands of distribution partners, serving over 30 million customers. As of December 31, 2020, we had $1.3 trillion (US$1.0 trillion) in assets under management and administration, and in the previous 12 months we made $31.6 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 155 years. We trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.
SOURCE Manulife Investment Management
For further information: Media Contact, Olivia Jones, Manulife, 438-340-3416, [email protected]
Bank of America Cuts Staff in Investment Banking and Trading – Yahoo Canada Finance
The Canadian Press
OTTAWA — The Canadian Armed Forces is reeling after news defence chief Admiral Art McDonald is being investigated for misconduct, only weeks after military police launched an investigation into allegations against his predecessor. Defence Minister Harjit Sajjan revealed late Wednesday that McDonald had “voluntarily stepped aside” while military police investigate unspecified allegations. McDonald took over as the chief of the defence staff last month from Gen. Jonathan Vance, who is being investigated after allegations of inappropriate behaviour. Vance has denied any wrongdoing and McDonald has not commented. Canadian Army commander Lt.-Gen. Wayne Eyre has been appointed acting chief of the defence staff. Conservative defence critic James Bezan called Thursday for the government to reveal the nature of the allegations against McDonald, who used his first address as defence chief on Jan. 14 to apologize to victims of military sexual misconduct and hate. “In the interest of morale, and for our women and men in uniform to have confidence in the senior leadership of the Canadian Armed Forces, Minister Sajjan must confirm why chief of defence staff Admiral Art McDonald is under investigation,” Bezan said in a statement. Bloc Québécois Leader Yves-François Blanchet said the message from the government must be that the military “can be no less than exemplary.” “I believe that the people that go into the army, that decide that this is their choice for a career, are good people, and must not be judged as a whole. I believe that there are a few people in the institutions that are not up to the task of being exemplary.” In a memo to members of the Forces on Wednesday, McDonald made no mention of allegations against him, but said the “time for patience is over” and the military must “accelerate our culture change.” “Our institution can no longer put the burden of change and transformation on those affected by harassment, discrimination, or any form of misconduct. That burden must rest on us. All of us,” he wrote. “I as the Chief, along with all the leaders in CAF, need to work every day to earn your trust. And we are all committed to doing so.” “If you are considering speaking to anyone with information on (the Vance) case, or any other case of alleged misconduct, you have my support to come forward, to speak up, and to tell the truth. And you can expect to be heard, supported, and protected as you do.” The investigation of McDonald has renewed calls for external oversight of the military, which self-polices allegations of sexual misconduct in the ranks. Lawyer and retired colonel Michel Drapeau said the government needs to appoint a permanent and independent inspector general similar to that of other militaries. That person would have the investigative powers to look into allegations of wrongdoing within the Canadian Armed Forces. “If, during his investigation, he came across any evidence of a criminal nature, he would be duty bound to stop his investigations and turn the matter to the criminal police,” Drapeau said in an email. Barring that, Drapeau said, Sajjan should immediately convene a board of inquiry — perhaps headed by a military judge — to investigate the allegations against McDonald, with police only involved if the allegations are of a criminal nature. Should police become involved, Drapeau added, it should be the RCMP, not the Canadian Forces National Investigation Service, the investigative arm of the military police. “I do not have confidence in terms of training, experience and independence,” Drapeau said of the service, known as the NIS. “Additionally, (the military police) and NIS report to the vice-chief of the defence staff, which makes any claim of ‘independence’ illusory.” In addition to criminal offences, Canadian military personnel can also be charged with what are known as service offences, which usually relate to inappropriate conduct such as drunkenness and having a relationship with a subordinate. Former naval reservist Marie-Claude Gagnon, who founded a group for survivors of military sexual misconduct called It’s Just 700, has been raising concerns for years about gaps in the system. She said the time for external oversight of the Armed Forces is now. “External oversight, it’s essential,” Gagnon said. “Self-policing itself has never worked. … It’s not a recipe for success. I’m hoping that there’s no doubt that there needs to be oversight.” In the House of Commons Thursday, Conservative MP Leona Alleslev said a thorough, independent investigation of the allegations against McDonald is critical, but senior officers who may themselves be complicit remain in key positions within the chain of command. “How will the minister ensure that compromised senior officers are not interfering in these investigations to protect themselves?” she asked during question period. Sajjan replied that all allegations would be investigated thoroughly, independent from the chain of command. “And regardless of position, and regardless of rank, we will take the appropriate action because we owe it to our members.” This report by The Canadian Press was first published Feb. 25, 2021. — With a file from Christopher Reynolds Lee Berthiaume, The Canadian Press
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