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Tacita Capital Commentary  |  30 April 2022

2021 Global Factor Roundup

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market. Read more>

Investment Executive: Focus on Products  |  02 November 2020

Many advisors need to retool their portfolio models

Low interest rates will be here for years as central bankers cope with the aftermath of the massive economic collapse triggered by the Covid-19 pandemic. The dismal interest rate outlook has major ramifications for your clients’ portfolio construction. Read more>

Tacita Capital Commentary  |  29 January 2020

2019 Global Factor Roundup

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market. Read more>

Investment Executive: Focus on Products  |  17 December 2019

Finding value in the value factor

Despite recent underperformance, there still may be a value premium.

Has the value factor — the tendency of value stocks to outperform growth stocks — faded into oblivion? Several recently published papers argue otherwise. The EDHEC-Risk Institute in France analyzed factor returns in the U.S. from 1977 to 2017 and concluded that value’s recent underperformance is not abnormal and occurs fairly frequently.

The analysis of macroeconomic influences suggests negative surprises over the past three years are in part a contributor to the underperformance. Read more >

Investment Executive: Focus on Products  |  11 October 2019

Managing liabilities

The advisor’s job includes making sure a client’s portfolio can fund future expenses.

Ever since the groundbreaking research of Gary Brinson, Randolph Hood and Gilbert Beebower identified asset allocation as the primary determinant in the variability of portfolio returns, thoughtful investment advisors focus on asset-mix composition as the building block of portfolio construction. The goal has been to construct optimally diversified portfolios that seek the highest return relative to their risk as measured by volatility. Read more >

 

Investment Executive  |  31 May 2019

The quality puzzle

Why do markets reward investors for holding stocks that usually provide excess returns over low-quality ones?

Of all the factors associated with long-term outperformance by equities, quality is the most puzzling. Because investors demand a return premium for incurring risk, it is easy to understand why small company stocks have outperformed over long time frames: they are more volatile and less liquid than large-capitalization stocks. Read more >

Investment Executive: Focus on Products  |  15 April 2019

Realities of full market cycles

Impressive returns over the past decade represent only the bull phase of the market cycle.

Many investors must be delighted with the 10-year performance of their equity funds. International and emerging markets stocks, as measured by MSCI market indices, delivered 10.5% and 11.1% annual returns, respectively, for the decade ended Feb. 28, 2019, while the S&P 500 composite index sported a stunning 17.1% annual return. Even the lacklustre Canadian market posted double-digit returns, with the S&P/TSX composite index returning 10.2% per annum. Read more >

Investment Executive: Illiquidity has its risks  |  13 February 2019

Illiquidity has its risks

Private investment funds often are marketed as a cure-all to low interest rates and equities market volatility.

Private investment funds that invest in illiquid assets such as mortgages, corporate loans, real estate and private companies are growing in popularity. Low interest rates have dulled the appeal of investment-grade bonds, the traditional portfolio stabilizer, while nerve-racking volatility has left many investors disenchanted with stocks, the classic source of higher returns. Read more >

Tacita Capital Commentary  |  22 January 2019

Three Big Rocks

The fourth quarter of 2018 featured a bruising October followed by a muted November recovery that only served as a fleeting pause before a deep market selloff capped off the year. Read more>

Tacita Capital Commentary  |  07 November 2018

How Common Are New Market Highs?

With the U.S. stock market hitting all time highs, a question you may be asking yourself is, how should I be feeling about that? Phrased another way, how common are market highs? Are they extremely rare and should I be panicking or are they pretty much par for the course?
To try and answer these questions we must put market highs into historical context. Read more >

Investment Executive: Focus on Products  |  23 October 2018

Patience is a key factor

Momentum is dead. At least that’s what several studies published in the first half of this decade suggested. Back then, momentum – the well-documented tendency of stocks that have outperformed over the past three to 12 months to continue to outperform for a short period – was no longer generating excess returns reliably. Read more > 

Investment Executive: Focus on Products  |  31 July 2018

Biggest risk to retirees

Today, retirees are rightly concerned with the risk exposure of their portfolios. Therefore, financial advisors appropriately spend considerable time designing portfolios that meet their clients’ downside risk tolerances. Read more >

Tacita Capital Commentary  |  24 July 2018

Regional Factor Face-off

Modern finance has discovered that stocks that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. These factors or “dimensions of the market” can be classified as: dividend yield, volatility, momentum, quality, size and value. Read more >

Investment Executive: Focus on Products  |  01 March 2018

The search for excess returns

Today’s low interest rates and high stock valuations translate into modest expected future returns. At a time of increasing longevity, this situation creates a formidable challenge to financial advisors assisting their clients in retirement planning. Read more >

Investment Executive: Focus on Products  |  01 February 2018

Expecting too much?

Global synchronized growth, combined with muted inflation and low interest rates, propelled stocks to new highs in 2017. Read more >

Tacita Capital Commentary  |  13 January 2018

2017 Global Factor Round Up

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market. Read more >

Investment Executive: Focus on Products  |  01 December 2017

A major market shift

For many years, Canada’s stock market was a proxy for emerging-market equities. In both markets, energy and materials have played an outsized role. Read more >

Investment Executive: Focus on Products  |  15 September 2017

No panacea, but useful

Active share – a measurement of the degree to which an active portfolio manager’s portfolio varies from its benchmark index – has become one of the most popular metrics in the investment industry. Read more >

Investment Executive: Focus on Products  |  01 August 2017

Active managers

As financial advisors pour billions of dollars into index-based ETFs, the use of active managers in portfolio construction increasingly comes under question. Read more >

Investment Executive: Focus on Products  |  15 June 2017

Forecasting market returns

There is an adage from Wall Street’s early days: “Valuation helps define risk, but it doesn’t help with timing.” Brokers learned eons ago that simply because a stock is cheap or expensive says nothing about its short-term price direction. Read more >

Investment Executive: Focus on Products  |  15 February 2017

Curb your enthusiasm

Several academic studies have determined that investors’ future return expectations are heavily influenced by recent performance. With the Canadian stock market delivering an exceptional 21.2% in 2016 and the U.S. market up 17.4% annually over the past three years, many investors are likely ratcheting up their return expectations. Read more >

Investment Executive: Focus on Products  |  15 January 2017

Not dead yet

In the U.S., actively managed domestic equity mutual funds have suffered nine years of consecutive outflows as investors have poured money into index domestic equity mutual funds and ETFs. The contrast is glaring – from 2007-15, US$835 billion exited actively managed domestic equity mutual funds while $1.2 trillion flooded into index domestic equity mutual funds and ETFs. Read more >

Investment Executive: Focus on Products  |  01 November 2016

Benefits of concentration

Proponents of actively managed, concentrated portfolios will be heartened by the results of a study published recently in the Financial Analyst’s Journal.

The authors, Eitan Goldman, Zhenzhen Sun and Xiyu (Thomas) Zhou, analyzed the returns and portfolio concentration of 3,895 actively managed U.S. equity mutual funds from 1990-2012. They found that funds with a higher level of portfolio concentration within sectors display better performance. Read more >

Investment Executive: Focus on Products  |  15 May 2016

Sell in May and go away

Calendar anomalies have been studied by financial academics and practitioners for decades. These irregular stock return patterns include the January Effect, the Holiday Effect, the Turn of the Month Effect and the weekend Effect. Every spring, one such anomaly – Sell in May and Go Away, also known as the Halloween Effect – is a recurring topic in the financial press.  Read more >

Investment Executive: Focus on Products  |  01 April 2016

Impact of negative rates

A tour of eurozone government bond exchange-traded funds (ETFs) provides a glimpse of the negative interest rate challenge that may confront Canadian investors within the next few years. As of March 9, iShares Euro Government Bond Zero- to One- Year UCITS ETF, managed by BlackRock Advisors (U.K.) Ltd., sported a negative yield to maturity (YTM) of minus 0.25%, while the one- to three-year and the three- to five-year versions had YTMs of minus 0.8% and minus 0.5%, respectively. Read more >

Investment Executive: Focus on Products  |  15 February 2016

Risk and reward

The current yield to maturity (YTM) of a default-free government bond is a reasonable estimate of its future expected return. Studies have found that the correlation between the beginning YTM and the subsequent realized return on 10-year US treasuries is in the 0.9 range. As interest rates change, the gain or loss on reinvestment income is offset by roughly the loss or gain on the principal value. Unfortunately, Canadian federal government bonds hit record lows in mid-January.  Read more >

Investment Executive: Focus on Products  |  15 January 2016

Beating the market

Since the 1960’s, financial theorists have been building models that explain stock returns as a function of their risk exposure. Originally, the capital-asset pricing model focused on a single factor – market exposure – as the driver of returns. By the 1970s, however, financial theorists were proposing an array of factors – fundamental, macroeconomic and statistical – as the determinants of expected returns. Read more >

Investment Executive: Focus on Products  |  01 December 2015

Active management: Three key criteria for stellar performance

The double-digit growth of index-based exchange-traded fund (ETF) assets under management (AUM) globally has outpaced that of actively managed portfolios. In 2014, Canadian ETF AUM increased by 21%, a growth rate that is almost 50% higher than that of traditional mutual fund AUM. Read more >

Financial Post  |  10 April 2015

Say bye-bye to yesterday’s bond nirvana and hello to tomorrow’s suffering

Ever since the U.S. Fed chairman Paul Volcker crushed runaway inflation in the early 1980s, conservative retirees with bond-laden portfolios have been in nirvana.

From 1982 to 2014, as inflation generally fell faster than interest rates, Canadian government bonds delivered a stupendous real (i.e., after inflation) return of 6.5% per annum – nearly three times greater than the 2.2% average since 1900. A real annual return in the magnitude of 6% to 7% is typically only available from growth-oriented investments such as equities. Read more >

Tacita Capital Commentary  |  01 January 2015

2014 Global Factor Round Up

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market. Read more >

Investment Executive: Focus on Products  |  01 December 2014

Small-cap premium?

Academic research in the U.S. has shown that in addition to market risk, certain dimensions of the stock market or “factors,” including company size, explain stock returns. Over long periods of time, small-capitalization stocks, on average, have higher returns than the stocks of large companies and, hence, exhibit a size premium. Read more >

Investment Executive: Focus on Products  |  01 November 2014

The equal-weighting option

Financial advisors in search of lower-cost equity funds with higher long-term return potential might consider exchange-traded funds (ETFs) that strive to replicate equal-weight indices. Read more >

Investment Executive: Focus on Products  |  01 October 2014

A hedge fund alternative

Savvy financial advisors know that a buoyant stock market doesn’t last forever and, consequently, maintain suitable risk profiles in their clients’ portfolios. The challenge today is that the traditional anchors of stability for portfolios – investment-grade bonds – offer paltry yields and have heightened interest rate risk. Hedge funds, although no panacea, are an option because of their lower volatility and drawdown relative to stocks. Hedge funds, however, have drawbacks. Read more >

Financial Post: Personal Finance  |  09 August 2014

The wrong guideposts for retirement planning

No one wants to outlive their money. No wonder many retirees fixate on how much income their portfolios will generate. They often assume that if they can just produce enough income to live on without touching the principal, their financial future will be “golden.” Nothing could be further from the truth.  Read more >

Investment Executive: Focus on Products  |  01 August 2014

Searching for ERP

One of the tenets of modern finance is that risk and return are inextricably related as investors demand a premium (or excess return) for risking their capital. In respect to stocks, this excess return is referred to as the “equity risk premium” (ERP) and is measured as the difference in return between that of a broad stock market index and of high-quality government debt, such as treasury bills. Read more >

Advisor's Edge  |  06 June 2014

When to avoid RRSPs

Many clients assume money put into RRSPs will stay there until retirement. That’s the goal, but life isn’t always so tidy. Read more >

Morningstar  |  06 June 2014

Advisors share their ideas on thinking globally

Sharp regional differences in equity-market returns underline the need for Canadian investors to look for investment opportunities beyond their own backyard. “Investors in U.S. equities over 2013 enjoyed (as much as a) 40% return if they invested in January of 2013,” says James R. Nairne, associate director, business development at Tacita Capital Inc. Read more >

Investment Executive: Focus on Products  |  01 April 2014

Portfolio rebalancing

With expected returns compressed by low interest rates and above-average stock market valuations, financial advisors are challenged in helping their clients achieve their retirement goals. Even before management costs, the numbers seem daunting. Read more >

Financial Post  |  11 February 2014

Beware of “chasing false returns”

Mutual fund marketers must be licking their chops in anticipation of attracting assets in 2014. Boosted by the tailwind of a falling Canadian dollar, the S&P 500 delivered a stunning 41.3% return in 2013, the most impressive annual performance in over half a century.  Read more >

Investment Executive: Focus on Products  |  15 January 2014

Measuring hedge funds

Hedge funds often are treated as an asset class, but in actuality they’re a heterogeneous assortment of distinct investment strategies that invest in various underlying asset classes ranging from bonds to stocks to commodities. Read more >

Financial Post: Managing Wealth  |  11 December 2013

Underfunded retirement? Go cold turkey on spending.

The average life expectancy of a 60-year-old is approaching 90 but the bad news is that many affluent Canadians can’t really afford to live longer. According to a study by McKinsey & Company, 41% of older, high income Canadians are not on track to maintain their standard of living in retirement. Read more >

Investment Executive: Focus on Products  |  01 December 2013

Better yield, higher risk

It’s easy to understand the appeal of emerging-markets bonds. With the DEX universe bond index in Canada yielding 2.7% as of Oct. 31, the 5.6% yield of emerging-markets bonds – as measured by the J.P. Morgan EMBI global diversified index C$-hedged (JPMEMBI) – is attractive. However, financial advisors need to look beyond yield to assess the risk characteristics of this asset class before including it in clients’ portfolios. Read more >

Financial Post: Managing wealth  |  27 November 2013

The one easy rule you need to know for picking a winning index fund

Imagine that you have decided to invest in a stock mutual fund. Given the tear the American market has been on lately, you decide to invest in a fund that exclusively buys U.S. stocks. Also, because you’ve heard some good things about index funds, you decide to buy a fund that tracks the investment results of the S&P 500 index and owns 500 leading, large companies in the U.S. Fortunately, you have some choice because more than one investment company offers this type of index fund.

So looking at the chart below, which fund would you pick? Read more >

Investment Executive Interview  |  15 November 2013

Should you ignore market forecasts?

Michael Nairne discusses the efficacy of forecasting for financial markets. He explains which measures do and do not work, and how to address client requests for predictable income. Nairne spoke with Dan Richards of clientinsights.ca at the TMX Broadcast Centre in Toronto.  Link to video on Investment Executive >

Financial Post: Personal Finance  |  12 November 2013

Can a computer generated portfolio deliver better returns?

In a host of endeavours, quantitative models are surpassing human experts in decision accuracy. Software programs that predict the location and frequency of criminal activity have repeatedly beaten the forecasts of experienced police analysts. Models that assess credit worthiness have proved so superior to human judgment that they are now used across the credit card and mortgage industries.  Read more >

Investment Executive: Focus on Products  |  01 November 2013

Time to ditch bonds?

With investment-grade bonds in the red this year and yields at dismal levels, many financial advisors are considering reducing their clients’ allocations to this asset class. But before acting, you should consider the important role that bonds play in risk mitigation within a balanced portfolio. Read more >

Financial Post: Managing Wealth  |  26 October 2013

Leaving an inheritance to the kids

After a lifetime of hard work and saving, you have accumulated serious assets. When you die, do you really want your diligence to fund a life of leisure for your kids? Or do you worry that your children lack the know-how to manage significant amounts of capital, and that a sea of red ink will swamp your financial legacy? Read more >

Financial Post: Investing  |  11 October 2013

Active fund managers take another beating

Advocates of active investment management over passive index investing must be cringing at the latest results of the S&P Dow Jones Indices vs. Active Funds (SPIVA) Canada Scorecard. Read more >

Investment Executive: Focus on Products  |  01 October 2013

Emerging markets’ value

Emerging markets are an increasingly important component of global markets. Consisting in 1988 of 10 countries that comprised only 1% of the world’s stock market capitalization, emerging markets have expanded to include 21 countries comprising approximately 12% of the total market cap of the MSCI all-country world index.   Read more >

Advisor.CA  |  11 September 2013

Minimize risk with alternative strategies

Core and explore is often seen as the opposites-attract couple of investment strategies: play it safe in the core with index products; and use the exploratory or satellite component—between 10% and 20% of the portfolio—to rake in outsized returns. Read more >

Advisor.CA  |  11 September 2013

To tilt or not to tilt

You’re committed to a disciplined asset allocation strategy. Yet you also want to add alpha to your clients’ portfolios. Can you do both? Yes, by tilting: overweighting (or underweighting) certain asset classes, geographic markets or individual stocks within a broader asset allocation. Read more >

Investment Executive: Focus on Products  |  01 August 2013

Measures of quality

Ongoing research into the fundamental drivers of stock returns continues to identify opportunities for outperformance. Robert Novy-Marx recently published an article in the Journal of Financial Economics, entitled “The Other Side of Value: The Gross Profitability Premium,” which has created a stir in both academia and the passive investing world. Read more >

Financial Post: Managing Wealth  |  30 July 2013

Why there’s no such thing as a safe haven

Investors who flocked to “safe haven” assets over the past several years suffered a rude shock in 2013. Government bonds, the security blanket of choice for investors traumatized by the global credit crisis, lost 2.2% in the first half of this year. Yet, this disappointing performance looks absolutely scintillating compared to gold bullion. Read more >

Tacita Capital Commentary  |  03 July 2013

Fantasy versus Factors

A casual observer of the investment management industry could easily surmise that active investment managers effortlessly generate “alpha” – risk-adjusted returns in excess of an appropriate market benchmark. Read more >

Financial Post: Managing Wealth  |  26 June 2013

Number of world’s millionaires up by 50% since 2008

Despite an insipid economic backdrop, global private financial wealth growth accelerated markedly in 2012. According to the recently released Global Wealth 2013 report by the Boston Consulting Group (BCG), private financial assets worldwide reached $135.5-trillion in 2012 – a 7.8% increase from the prior year and a marked recovery from the tepid 3.6% growth in 2011. Read more > 

Advisor.ca  |  18 June 2013

Faceoff: Latching onto loonies

When markets are choppy, lots of investors feel safer investing in names they recognize. But this bias may be more detrimental than dynamic. Read more >

Investment Executive: Focus on Products  |  15 June 2013

The next wave of ETFs

There is an evolution underway in the exchange-traded funds (ETFs) space that allows financial advisors to construct better portfolios for their clients.

ETFs originally were designed to replicate the returns of well-known, market capitalization-weighted indices such as the S&P 500 composite index. Today, the index methodologies that underlie certain ETF portfolios have advanced in three significant ways to create the potential for superior risk-adjusted returns or even market-beating performance. Read more >

Investment Executive  |  01 June 2013

CRA puts money behind foreign reporting rules

The federal government continues to bolster its efforts to fight offshore tax evasion and aggressive tax avoidance, recently announcing that it has established a team of experts at the Canada Revenue Agency (CRA) and will be providing the agency with $30 million over the next five years to crack down on offshore tax evaders. Read more >

Financial Post: Managing Wealth  |  23 May 2013

Comeback in international equities shows forecasting just a ‘guessing game’

If you ask the average investor which stock market has been the top dog of late, the answer would likely be the U.S. After all, the financial media has been ablaze with the news of the Dow Jones and S&P 500 indices hitting record highs. Yet, over the past year, U.S. stocks actually have come in second regionally. Read more >

Financial Post: TFSA  |  13 May 2013

Fragmented investment management can add to tax bite

Most high net worth investors are only too happy to bid adieu to tax time each year. Assembling all of the investment income slips and back-up required by their accountant can be a real chore. Adding to the ordeal is the fact that many affluent investors work with more than one investment firm. Read more > 

Investment Executive Interview  |  29 April 2013

The perils of fragmentation for HNW clients

Joanne Swystun and Michael Nairne explain how HNW investors often have multiple managers and therefore no central CIO to manage tax efficiencies, overall portfolio strategy and asset management. They spoke with Dan Richards, President, Client Insights, at the TMX Broadcast Centre in Toronto and gave pragmatic tips on how to ensure HNW clients steer clear of fragmentation and build a cohesive management strategy. Link to video on Investment Executive >

Financial Post: Managing Wealth  |  16 April 2013

How to avoid the dreaded return gap

Virtually every study of investor behaviour has found that the average investor’s returns from their fund investments lag the returns earned by the funds themselves. This return gap has usually been attributed to ill-timed buying and selling as investors chase returns, particularly those of hot managers. New research in the U.S. released by Morningstar Inc. confirms that this return gap continues unabated.   Read more >

Investment Executive: Focus on Products  |  15 April 2013

Gaining momentum

Selecting equity investments that have the potential to outpace the overall market is challenging for financial advisors. Based on an analysis by my firm, Tacita Capital Inc. of Toronto, one strategy with the potential to do that is using momentum securities. Read more >

Financial Post: Managing Wealth  |  19 March 2013

High MERs may be the least of your problems

When Harry Markowitz, an aspiring graduate student, had his article entitled Portfolio Selection published in the Journal of Finance in 1952, he could not have foreseen that his insight into diversification would earn him the Nobel Prize. Read more >

Investment Executive: Focus on Products  |  15 February 2013

Hedge funds lag stocks

Canadian hedge funds lost 4.7% in 2012, as measured by the asset-weighted Scotiabank Canadian hedge fund index (SCHFI), which tracks the 70 domestic hedge funds that constitute the bulk of the sector in Canada. In comparison, the S&P/TSX composite index returned 7.2%. Read more >

Financial Post: Managing Wealth  |  06 February 2013

The affluent investor’s harsh RRSP reality

When affluent investors make their RRSP contributions, three financial events occur simultaneously. First, they are adding to their retirement investment capital. Second, they are creating a deduction that will reduce the tax they would otherwise be required to pay. So far so good! Read more > 

Financial Post: Managing Wealth  |  02 February 2013

Investors behaving like “generals who are always prepared to fight the last war”

Investors disappointed by the performance of stocks since the start of the new millennium have found solace in the 6.7% annual return of Canadian investment grade bonds. Bond investors enjoyed an annual real (i.e. net of inflation) return of 4.6%, a hefty premium to historic norms. Now, with the stock market perking up, many investors are looking forward to more favourable returns adding a little more gust to their sails in the years ahead. Read more >

Financial Post: Managing Wealth  |  18 January 2013

Why savvy, wealthy investors ignore market forecasts

Every year at this time a bevy of market gurus trot out their forecasts for the coming year. My favourites are the stock return predictions which, year in and year out, tend to be in the 5%-to-10% range. This seems to make sense — since 1926, large-company stocks in the United States have earned an average annual return of 9.8%. No wonder most market calls end up within striking distance of this average. Read more >

Investment Executive: Focus on Products  |  15 January 2013

Low-cost portfolios

Just when most financial advisors have become familiar with exchanged-trade funds (ETFs), they will have to master a new nomenclature. ETFs are now part of a category of what is known as “exchange-traded products” (ETPs). Read more >

Investment Executive  |  15 December 2012

Assessing bond risks

Quality bonds are the investment of choice today. In Canada, equity mutual funds are in net redemption almost every month while bond funds enjoy capital inflows. Investment-grade bonds have clobbered almost every major asset class over the past five years. Read more >

Financial Post: Managing Wealth  |  28 November 2012

Wealthy investors go global

What do Canada’s largest pension plans, major U.S. endowments and wealthy families have in common? They have taken their portfolios global by allocating an increasing share of their equities to foreign versus domestic stocks. Read more >

Financial Post: Managing Wealth  |  20 November 2012

How to protect your portfolio…from yourself

It’s easy to blow a hole in a portfolio. Just dump your stocks and head for the hills at the bottom of a nasty bear market. Then wait anxiously on the sidelines only to venture back in once prices have rallied. Or feverishly chase the latest hot manager until both your ardour and capital are swept away when the red ink starts. Read more > 

Financial Post: Managing Wealth  |  19 November 2012

What we can learn from the wealthy

It’s demanding enough to manage several million dollars properly but when the wealth climbs into the hundreds of millions or even billions, the challenges and complexity skyrocket. In recognition of this, many ultra-wealthy families set up what is called a single family office (SFO) to manage their financial affairs. Read more >

Investment Executive  |  15 November 2012

Fee competition heats up

There is a clash of the titans underway that is benefiting both financial advisors and their clients.  The new Canadian division of Vanguard Group Inc., with more than US$2 trillion in assets under management (AUM), is challenging the Canadian subsidiary of BlackRock Inc., which handles more than US$3.5 trillion in AUM, in the fast-growing exchange-traded fund (ETF) sector. Read more > 

Financial Post: Managing Wealth  |  13 November 2012

Why wealthy investors are cutting back their bond holdings

Month after month, investors have been dumping their equity funds and loading up on bond and balanced funds. Who can blame them? Since late 2007, stocks have given them the rollercoaster ride of a lifetime, at the end of which the S&P/TSX Composite and S&P 500 produced average annual returns of -0.3% and 1.4% respectively. Read more >

Financial Post: Managing Wealth  |  16 October 2012

Ultra-wealthy look to Ivy League endowment funds for investment lessons

Today’s paltry interest rates on top of a decade of mediocre stock returns have prompted many wealthy families to search for more rewarding portfolio solutions. Some are turning to the trail blazing example of leading U.S. college endowment funds such as Yale’s and Harvard’s, which have been leaders in the quest for higher returning portfolios.
Read more >

Investment Executive  |  15 October 2012

The convertible option

As the search for yield intensifies, convertible bonds are receiving attention as an asset class that offers a unique blend of income, downside protection and opportunity.

To assess this asset class’s long-term performance, the research team at Tacita Capital Inc. spliced the BofA Merrill Lynch U.S. convertible bonds all qualities index (ML index), available since January 1988, with the Ibbotson Associates (IA) monthly convertible bond index, available since January 1973. Canada lacks a similarly comprehensive index. Read more >

Financial Post: Managing Wealth  |  10 October 2012

Peeling back the curtains on private money managers

There is a mystique that surrounds the investment affairs of the wealthy.

Instead of pedestrian mutual funds, they can access discretionary private money managers with hefty million or multi-million-dollar minimum account requirements. Unlike the fund world where performance is mercilessly on display day in and day out, the track records of private money managers are often shrouded in secrecy. Read more >

Tacita Capital Commentary  |  30 September 2012

High Dividend Yield Strategy under the Microscope

Today’s ultra-low interest rates have propelled investors into a frantic quest for higher income. In response, high dividend yield stocks have become the favourite recommendation of a host of advisors. Read more >

Financial Post: Managing Wealth  |  15 September 2012

The odyssey of retirement planning

Retirement! For many, the very word conjures up images of freedom — an escape from the demands and drudgery of work; a chance to travel and pursue much neglected avocations; and the time to really enjoy the company of family and friends.
Retirement is supposed to be an exciting new stage of adventure and self-determination. Unfortunately, the reality is both different and much more complex. Read more >

Financial Post: Managing Wealth  |  08 August 2012

Toting up the score; indexing vs. active investing

Keeping score is how winners are separated from losers. So it’s not surprising that a decade ago, analysts at Standard & Poor’s decided to do just that by pitting the performance of S&P indexes such as the S&P 500 against the returns of actively managed mutual funds.
To keep the scorecard honest, their work incorporated three key features missing in many studies. Read more > 

Investment Executive  |  15 July 2012

Options for income?

TODAY’S PALTRY INTEREST rates have financial advisors searching for investments that offer enhanced income. One strategy is covered call writing – selling call option contracts on a stock or basket of stocks for premium income while owning an equivalent amount of the underlying stock(s). Read more > 

Financial Post: Managing Wealth  |  14 July 2012

Intuition won’t help you make money

Have you ever been on the receiving end of an investment pitch? More often than not, the sales story is proclaimed in glowing terms such as – this is a “world class” manager who has consistently achieved “best in class” performance. The piece de resistance is typically a table comparing the recommended manager’s top drawer returns over the past three or five years to that of his or her peers. Read more >

Financial Post: Managing Wealth  |  24 June 2012

How to create a wealth transfer plan

A mindfulness of mortality is sweeping through Baby Boomers as their parents age and pass away. Heretofore so adept at turning back the clock … isn’t 60 the new 40?
But Baby Boomers are waking up to the fact that some passages just can’t be postponed. This newfound awareness combined with their own children reaching adulthood has focused many wealthy Boomers on the need to overhaul their own wealth transfer plans. Read more >

Financial Post: Managing Wealth  |  20 June 2012

Markets: Don’t get emotional

With the developed world mired in slow growth and the eurozone teetering on the brink of disintegration, to many investors the future seems bleak. Some are so disheartened they are abandoning the stock market as a hopeless endeavour. Yet, one of the abiding tenets of investing is that investor sentiment is rarely predictive of the future. Read more >

Tacita Capital Commentary  |  15 June 2012

The Plight of the Conservative Retiree

Only a few short years ago, investors demanded a 5.0% yield to invest in AAA rated US Treasuries. Those days are a distant memory. As illustrated below, the yield of Treasuries, now AA rated, plummeted to a miniscule .87% at the end of May. Market historians have to go back to World War II when rates were set by the joint agreement of the Federal Reserve and the Treasury Department to find rates so low. Read more > 

Financial Post: Managing Wealth  |  07 June 2012

The journey to inconceivable yields

The yields of government bonds of “safe” countries have plumbed new lows as investors engaged in another round of panicky bond buying. News that depositors are fleeing not only Greek but now Spanish banks alarmed the market. However, it was signs of a broadening economic slowdown in the U.S. and China that really triggered a flight to quality. Read more >

Financial Post: Managing Wealth  |  29 May 2012

The lopsided bet

Are you a betting person? Well, if you are, I have a wager about skillfulness that you might consider. First, let me lay out the odds. Your chance of winning this bet is only about one in seven — clearly a long shot. In this wager you stand to lose about 86% of the time. Read more >

Financial Post: Managing Wealth  |  12 May 2012

Danger lurks in a yield-starved world

The marketing antennae of the investment industry are finely tuned to the buying impulses of the investing public.
In the late 1990s, growth was the buzzword — you couldn’t read the financial media without being hyped on technology and Internet stocks and funds. In today’s yield-starved world, the sales focus is on high income or enhanced yield strategies. Read more >

Financial Post: Managing Wealth  |  28 April 2012

It pays to know your investment costs

There is one subject that the Canadian investment industry avoids like the plague — the costs associated with investing. This topic is particularly touchy because Canada is such an expensive country for investors. A 2011 Morningstar study compared the total expense ratios of money-market, fixed-income and equity funds in 22 countries and found that Canada had the dubious distinction of having the highest overall expense ratios. Read more >

Financial Post: Managing Wealth  |  23 April 2012

Focus on pre-tax returns results in costly tax bills

A cardinal error is committed with appalling frequency in managing the investments of affluent families — thinking in pre-tax instead of after-tax returns. This may seem surprising as taxes are often the biggest single expense of wealthy families. Similarly, affluent retirees live on after-tax, not pre-tax cash flows. Read more > 

Financial Post: Managing Wealth  |  31 March 2012

A tough time to retire

Imminent retirement often evokes a feeling of joyful anticipation as liberation from the daily grind beckons. However, for Baby Boomers hoping to retire in relative comfort, the prospect of no more paycheques provokes apprehension instead of delight.The massive market meltdowns of 2008-2009 and 2000-2002 have permanently scarred investor psyches. Read more > 

Advisor.ca   |  26 March 2012

Help cautious clients take risks

In Manhattan, pedestrians are statistically safer from fatalities when jaywalking than when using crosswalks. One theory: at crosswalks, people assume they’re secure, whereas jaywalkers look both ways to reduce the chance of being hit. Read more >

Financial Post: Managing Wealth  |  17 March 2012

9 ways to turbocharge your returns

Stock returns over the past five years have been downright dismal. In fact, many investors knocking on our door these days have earned virtually nothing since 2007 once you deduct management fees. And with interest rates now so low, unless we enter into a Japanese-style deflationary lost decade, the best days of bonds are behind us. So here are nine tactics that you can consider to improve your long-term performance in the years ahead. Read more >

Financial Post: Managing Wealth  |  03 March 2012

Portfolio diversity still your best bet

Imagine it’s January 2022 and you’ve just cracked open your latest investment statements. Are you smiling as you scan the numbers or are you cringing in despair? Of course, no one can predict with absolute certainty what returns will be over the next 10 years. However, several recent long-term forecasts by leading money managers and finance academics shed some light on what the future might hold. Read more > 

Tacita Capital Commentary  |  01 March 2012

The Rebalancing Premium

“Buy and hold” is not an effective strategy for risk conscious investors. Any portfolio’s asset mix will drift from its strategic target as asset prices move differentially in response to changing economic and market forces. Over time, the higher return assets will comprise a larger proportion of the portfolio and distort its return and risk dimensions from those originally constructedRead more >

Investment Executive  |  15 February 2012

Tactics for boosting yield

Today’s abysmally low interest rates and incredible market volatility have sent many financial advisors on the hunt for yield in a variety of fixed-income and equities investment vehicles. The pursuit of higher yield, however, can easily introduce new risks into a portfolio that are masked until changing economic or monetary conditions trigger their appearance. Read more > 

Financial Post: Managing Wealth  |  13 February 2012

Giving your inheritance now

Do you make an RRSP contribution or a TFSA contribution? Which is better? Every year a host of articles assist investors with this issue.
High income earners are fortunate – they don’t have to make a choice. They contribute to both their RRSPs and TFSAs to the maximum extent possible. And they do so as soon as possible every year to maximize tax-deferred and tax-free growth. Read more >

Financial Post: Managing Wealth  |  21 January 2012

Ignore those fallible forecasts

Every New Year brings a bountiful supply of economic and market forecasts by investment pundits. Well-researched, analytic and often insightful, the typical forecast, whether it is bullish, neutral or bearish, is artfully constructed. In search of guidance, many investors (and advisors for that matter) seize upon a specific strategist’s prognosis as a rationale for their investment decisions. This raises the question: Just how accurate are the forecasts of experts? Read more >

Tacita Capital Commentary  |  15 January 2012

The Dividend Yield Love Affair

Today’s rock bottom interest rates have propelled many investors to pursue high dividend yield stocks. This quest has been made more challenging by the fall in dividend yields over the past six decades. This decline is illustrated in the following graph that depicts the annualized dividend yield on the S&P 500 since 1950. Dividend yields, which topped 7% in the early 1950’s, dropped to their nadir of nearly 1% during the tech boom of the late 1990’s. They have since recovered somewhat but are still at a paltry level of just over 2%. Read more > 

Investment Executive  |  15 January 2012

Fixed-income arbitrage

In today’s environment, some financial advisors have undoubtedly been attracted to the high yields being offered by some fixed-income hedge funds. As fixed-income arbitrage strategies can possess unforeseen risks, the portfolio research team at my firm, Tacita Capital Inc. of Toronto, has delved into their performance. Read more >

Financial Post: Managing Wealth  |  07 January 2012

The five biggest pitfalls to staying rich

When it comes to wealthy families, the expression “easy come, easy go” is more aptly rephrased “arduously earned, easily extinguished.” Serious wealth typically arises from decades of hard work, investment and calculated risk-taking. Yet, hard-won wealth easily dissipates if it is not managed properly. Read more >

Financial Post: Managing Wealth  |  24 December 2011

A gift from risky markets

This holiday season, gloomy economic prospects and mercurial markets are actually bringing investors a gift in the form of increasingly attractive stock valuations. Unfortunately, cheaper stocks, like fruitcake, are the kind of present rarely appreciated by the recipient. Weary of the never-ending barrage of melancholic financial news, most investors miss the opportunity wrapped in lower prices — higher potential long-term returns. Read more >

Investment Executive  |  15 December 2011

Corporates’ rich returns

With interest rates on government bonds at levels not seen since the Second World War, many financial advisors are assessing investment-grade and high-yield corporate bonds for their clients’ portfolios. In turn, the research team at Tacita Capital Inc. has reviewed research on corporate-bond performance and analyzed several bond indices.
Read more > 

Financial Post: Managing Wealth  |  10 December 2011

Five things Wall Street doesn’t want you to know

Despite the blitz of flashy ads and seductive sales pitches this festive season, wise shoppers know that retailers have one paramount objective — to ring the cash register. Savvy consumers do their research, comparison shop, keep their impulses under control and hunt for the best value. Unfortunately, when it comes to Wall Street, many investors are bedazzled by the majestic pronouncements of market gurus and the illusionary reliability of short-term return numbers, and forget that Wall Street shares the same objective as Main Street — move the merchandise! Read more >

Financial Post: Managing Wealth  |  26 November 2011

Learning from investment leaders

Affluent investors can learn a lot from top endowments and pension plans. Take the Yale and Harvard university endowments, for example. Within the institutional world, they are renowned as astute, long-term investment strategists. Their results speak volumes — their annual returns of 10.1% and 9.4%, respectively, over the decade ended June 30, 2011 far outstripped the 4.3% return of the traditional pension mix of 60% stocks and 40% bonds. Read more >

Financial Post: Managing Wealth  |  16 November 2011

Financial security elusive in retirement

Retiring today with financial security is challenging. Courtesy of central banks, interest rates are at levels not seen since World War II. Then, ultra-low interest rate policies abetted wartime funding needs.
Today, central banks are promising a lengthy period of miniscule rates in a frantic effort to stave off the slumps and deflation that often follow on the heels of a credit crisis. Read more >

Tacita Capital Commentary  |  15 November 2011

Harnessing the Power of Momentum

Momentum is defined as the tendency for investments that have performed relatively well in the recent past to continue to do so and for relatively poorly performing investments to continue to fare poorly. It is a well-documented anomaly in modern finance. Numerous academic studies have confirmed that, when measured in periods of approximately three to twelve months, past investment winners tend to keep on outperforming while past losers tend to keep underperforming. Read more >

Investment Executive  |  15 November 2011

Income with low volatility

Today’s turbulent markets and dismally low interest rates have triggered a search for ways to moderate portfolio volatility without sacrificing return. One candidate is equity long/short funds. To obtain a picture of this strategy’s performance, the portfolio research team at Tacita Capital Inc. has reviewed recent research on both U.S. and Canadian hedge fund performance and analyzed several U.S. hedge fund indices. Read more >

CA Magazine  |  01 November 2011

The perils of a piecemeal approach

With today’s low rates and lukewarm valuations, ignoring the perils of a piecemeal approach means investors could be losing precious returns. Read more >

Financial Post: Managing Wealth  |  29 October 2011

Surprise! The world is getting richer

You wouldn’t know it from the endless torrent of gloomy news but the world is getting a lot richer. In fact, according to the Credit Suisse 2011 Global Wealth Report, total household wealth in the world has reached an all-time high of US$231-trillion. This enormous sum, which encompasses real assets including homes as well as financial assets, and is net of debts, is equivalent to $51,000 of wealth for every adult in the world. Read more > 

Financial Post: Managing Wealth  |  15 October 2011

Put some distance between you and your investments

Many investors’ account statements are now awash in a sea of red ink as a global bear market has mauled stocks. Some investors are fleeing equities; those who are staying put may feel like someone in stalled car on a railway track with the sound of a train whistle drawing closer. Read more >

Investment Executive  |  15 October 2011

Looking for income

With interest rates at levels not seen since the Second World War and stock prices in the red, many financial advisors are assessing ways to improve the income and risk-adjusted return potential of their clients’ portfolios. Read more >

Financial Post: Managing Wealth  |  17 September 2011

Protect portfolio from pickpockets

Bear markets savage most portfolios. In severe recessions, stock prices can plunge by more than 50%. Yet, it is not bear markets that cause the most damage to portfolios. Historically, stock markets have always recovered as business cycles swing from contraction to expansion. In fact, there have been 13 punishing bear markets since 1929. On average, stock prices doubled five years after their end. Read more > 

Tacita Capital Commentary  |  15 September 2011

The Global Old Normal

Investors can be excused for their preoccupation with short-term Investment results. Amidst a cascade of dismal economic news, the trauma of a precipitous fall in stock prices and the overhang of a decade-long drought in equity returns, the idea of “taking a long-term view,” to many, seems hopelessly pollyannaish. Yet, long-term planning has never been more essential. Aging “Baby Boomers” today are grappling with retirement funding challenges that span multiple decades at a juncture where interest rates are at dismally low levels not seen since World War II. Read more >

Investment Executive  |  15 September 2011

Gold shares vs bullion

With gold share prices badly lagging gold bullion prices, many financial advisors are wondering about their relative merits. To address this issue, my firm, Tacita Capital Inc., analyzed the Canadian-dollar returns of gold shares and bullion. To get a long-term picture of share performance, we spliced the S&P/TSX global gold index, available since October 2000, with the S&P/TSX gold index and the now discontinued TSX gold/silver index. Read more >

Financial Post: Managing Wealth  |  03 September 2011

Investors finally get a break

What is the single best predictor of a fund manager’s ability to outperform his or her peers? Sorry, it isn’t prior returns – we all wish it were that easy. Nor is it risk or the turnover in the fund. The unsurpassed predictor of a manager’s relative performance is his or her fund’s expense ratio. Read more > 

Financial Post: Managing Wealth  |  20 August 2011

Don’t leap from the frying pan into the fire

The fear in early August was almost palpable as stock markets plunged. The spectre of financial contagion from Europe, the downgrade of U.S. long-term debt and ever-worsening economic news was just too much for many investors. Anxiety that had never fully dissipated since the 2008/09 market crash reasserted itself with a vengeance, triggering a rush for the exits by many. Read more > 

Tacita Capital Commentary  |  15 August 2011

A Commentary on the Correction

Global stocks had plummeted 13.9% year-to-date as of the close of market on August 8th although they have since bounced back somewhat. The speed of this decline has staggered many investors, exacerbating a sense of anxiety that has not fully dissipated since the market crash. Read more > 

Financial Post: Managing Wealth  |  06 August 2011

Invest in statistics, not stories

A growth stock is always accompanied by a seductive storyline. Today, social-networking stocks exude the allure that they are poised to capitalize on a revolution in shared digital communication. Internet World Stats estimates that there are now over two billion Internet users globally, up 480% over the past decade. With this fertile, expanding market, spectacular growth seems assured. Read more > 

Financial Post: Managing Wealth  |  09 July 2011

For rich even 70% might not be enough

A well-known financial planning rule of thumb asserts that individuals need about 70% of their employment income to retire comfortably. Affluent investors can toss that guideline into the wastebasket. Given that wealthy retiring couples tend to have distinctive goals, retirement costs among the affluent can vary markedly. In fact, one U.S. study of affluent retirees found that nearly 20% of the respondents spent more in retirement than when they were working. Read more >

Financial Post: Managing Wealth  |  25 June 2011

The rich also lack financial discipline

It’s hard to stay on course. Millions of people start diets every year but don’t maintain their resolve. Home fitness equipment often gathers dust in a lonely corner of a basement. Self-discipline is also a challenge in personal finances and, based on a recent global survey of 2,000 high net worth individuals by Barclay’s Wealth, many affluent investors struggle with this problem. Read more >

Financial Post: Managing Wealth  |  23 June 2011

There is a pattern to all this drama

It takes a brave soul to read a newspaper today with a steady hand. The world seems to lurch from crisis to crisis. One day it’s the possibility of a financial contagion sweeping through Europe. The next, it’s the spectacle of political gridlock in the United States that could lead to a debt default. Story after story recounts languishing growth in most of the developed world along with sputtering employment gains. Read more > 

Investment Executive  |  15 June 2011

Managed futures strategies

Financial advisors in search of ways to improve their clients’ portfolio diversification should consider managed futures. These strategies provide direct exposure to futures contracts on financial assets such as stocks, government bonds and currencies, as well as on physical commodities such as energy, agricultural, industrial and precious metals, and soft commodities. Read more > 

Financial Post: Managing Wealth  |  11 June 2011

Separating skill from luck isn’t easy

If your investment manager beat the market over the past three years, you may want this question answered before congratulations are in order: Was this outperformance due to serendipity or skill? Unfortunately, the answer is that it is virtually impossible to tell. Read more > 

Financial Post: Managing Wealth  |  28 May 2011

Lies, damned lies and returns

The saying popularized by Mark Twain, “lies, damned lies and statistics,” might spring to mind when investors grapple with the reams of return numbers spewed out by funds, managers and the financial press. It’s easy to understand why investors can be confused. Read more >

Financial Post: Managing Wealth  |  14 May 2011

Peeling back the covers on Canada’s ultra-wealthy

It turns out there are a ton of millionaires in Canada. According to a recent study on global wealth by the Deloitte Center for Financial Services, there are 1,745,000 households in Canada who can boast a net worth of $1-million or more, about one out every seven households. Thank soaring house prices for a good chunk of this wealth. Read more >

Financial Post: Managing Wealth  |  30 April 2011

Time to go global

It is a heady time for Canadian investors. Our banks avoided the meltdowns experienced by many financial institutions in the global credit crisis. Demand for our commodities is skyrocketing. Canadian federal government bonds are rated a rock solid AAA. The loonie, once mocked as the northern peso, is riding high. Read more > 

White Paper for ETF & Indexing Investments USA 2011 Conference  |  25 April 2011

Exploring the Potential of Precious Metals ETF’s

In order to assess the potential of gold bullion ETF’s to enhance long-term portfolio performance, the research team at Tacita Capital Inc. analyzed the long-term returns and volatility of gold (USD) and the correlation of gold’s returns to inflation, the U.S. dollar, real bond yields and major asset classes. Our analysis included both historic and forward looking. Read more >

Financial Post: Managing Wealth  |  16 April 2011

Wealthy need to watch spending

There’s an old financial planning adage that states “your rate of saving is just as important as your rate of return.” Savings, particularly in the early years of wealth building, creates the seed capital that unleashes the magic of compounding. Today, with the Baby Boomers heading into retirement, a more apt adage is “your rate of spending is just as important as your rate of return.” Read more >

Tacita Capital Commentary  |  15 April 2011

Lessons from the Farm

Farmers know all about droughts. Droughts occur in nearly all climates and impair all types of crops. They are unpredictable, yet are recurring and can last for years. Likewise, performance droughts abound in the world of investing. Read more >

Tacita Capital Commentary  |  15 April 2011

The Real Story Behind Bond Yields

Since peaking in 1981, yields on the government bonds of most developed nations have fallen almost continuously, as illustrated in the following graph. Read more >

Investment Executive  |  15 April 2011

Small-cap caution

Financial advisors who invested clients’ funds in Canadian small-cap energy and resources stocks over the past decade have to be smiling. The BMO Nesbitt Burns small-cap energy and resources indices had annualized returns of 18.1% and 27.5%, respectively, from Jan. 1, 2001, through Feb. 28, 2011. Read more >

Financial Post: Managing Wealth  |  30 March 2011

Natural catastrophes are inevitable, so are market meltdowns

The tragic effects of the earthquake and tsunami in Japan have highlighted the calamitous consequences of major natural disasters. Fortunately, such catastrophes are rare. When they occur, many people are shocked. Read more >

Financial Post: Managing Wealth  |  19 March 2011

111 years of lessons

Investment plans require a long-term focus – one that considers decades of possible Investment performance, not just next month’s or next year’s. A sound plan also incorporates the important lessons of the past and avoids excessive bets based on the prognostications of the latest hot guru. Read more >  

Financial Post: Managing Wealth  |  05 March 2011

Retirement’s so yesterday

Many affluent people are tossing the conventional notion of retirement into the dustbin. Instead of dreaming of decades of leisure, the majority of the respondents in a recent global survey of wealthy individuals by Barclays Wealth want to keep on working. They envision themselves as Nevertirees rather than retirees. Read more > 

Financial Post: Managing Wealth  |  19 February 2011

The power of deferral

Wealthy people have a peculiar problem. Yes, they pay a boatload of taxes, but that alone is not the issue. Much of the income of many high net worth investors is taxed at the highest marginal rate. With top marginal rates approaching 50% on interest and other income for most Canadians, this tax bite seriously erodes investment returns. Take a bond yielding 4%, for example. At a 50% tax rate, the after-tax return is only 2%. Read more >

Tacita Capital Commentary  |  15 February 2011

The Sweet Spot

Investors face the challenge of funding decades of retirement in an environment of low interest rates and lacklustre stock valuations. For many, earning market returns alone will not suffice. Hence, thoughtful portfolio construction needs to incorporate asset classes that have higher long-term expected returns. In this regard, small company or small cap value stocks – the stocks of smaller companies that are low priced in relation to earnings, dividends and book value – have a critical role. Read more > 

Investment Executive  |  15 February 2011

Boosting client income

With low interest rates dampening returns from bonds, many financial advisors are using stocks and mutual funds with high dividend yields to bolster income returns for their clients. Based on an analysis of high-dividend-yield stock returns conducted by my firm, Tacita Capital Inc., this can be a wise move for the right clients. Read more >

Financial Post: Managing Wealth  |  05 February 2011

Chasing past fund returns a mug’s game

They’re back! After fading from sight for several years, those tantalizing fund ads trumpeting rocketing returns are in the media again. It’s no wonder. Last year, a number of mutual funds that focus on Canadian small-company stocks sported returns in the 40%-to-50% range. Some hedge funds did even better — several more than doubled in value. Read more >

Financial Post: Managing Wealth  |  22 January 2011

Prepare for the dark side of RRSPs

For the affluent, an RRSP is a vital vehicle in their retirement plan. It creates a tax-deferred environment in which high income earners, particularly well-compensated professionals and successful business owners, can build wealth over their working lives. This is critical since the returns from their non-registered investments, heaped on top of their incomes, are more often than not taxed at the highest marginal rate, which approaches 50% on interest and other income in many provinces. Read more > 

Financial Post: Managing Wealth  |  08 January 2011

Think before firing that fund manager

You’re fired! As investors react to their 2010 returns, many underperforming managers will be on the receiving end of these harsh words. U.S. mutual fund data indicate more managers are finding their heads on the chopping block these days. The average tenure of a fund manager in an investor’s portfolio was 2.9 years in 2008, down from 4.4 years in 2005. Read more >

Financial Post: Managing Wealth  |  26 December 2010

A wealth action plan for 2010

At the end of a busy year, many affluent individuals vow to get on top of their financial affairs. Sadly, they are often no more successful than they are at keeping their New Year’s resolutions. Like those extra pounds that survive annual January commitments to diet and exercise, a muddle of financial issues and administrative loose ends can easily endure year after year. Read more > 

Financial Post: Managing Wealth  |  18 December 2010

Put indexing in your stocking

This year when you line up to return pricey, outmoded gifts, you might consider doing the same with many of your mutual funds. That’s what serious investors should do based on sweeping new research on Canadian mutual fund performance released by The Vanguard Group Inc. Read more > 

Tacita Capital Commentary  |  15 December 2010

What’s Past is Prologue

As Shakespeare noted, the past is always a prologue to the future. Hence, investors should not have been surprised by the paltry 1.4% annualized return from U.S. stocks over the past decade. Lengthy spans of moribund or even declining prices have always followed periods of rapid ascent in stock prices, as was experienced from 1982 through 1999. Read more > 

Investment Executive  |  15 December 2010

Model role for gold

The plummeting U.S. dollar and rising inflation concerns as a result of more quantitative easing in the U.S. have highlighted gold shares as a portfolio option. Read more >

Financial Post: Managing Wealth  |  11 December 2010

Warning: Asset bubbles are underway

“Bubble, bubble, inflate and trouble.” Macbeth’s witches would surely be chanting this incantation at the spectre of the frantic efforts of central bankers to re-inflate the economies of the developed world. Both the Federal Reserve and the European Central Bank have stepped up their quantitative easing, essentially printing money by buying government bonds. Read more >

Financial Post: Managing Wealth  |  27 November 2010

Canada’s aging millionaires

Canada’s millionaires are turning from baby boomers to greying boomers. Based on research by Investor Economics, over 40% of Canada’s millionaires — those in households with financial assets in excess of $1,000,000 — are aged 65 years and older. Comprising nearly a quarter of a million households, this has been the fastest growing segment of the high net worth market, having climbed over 20% in the past five years. Read more >

Tacita Capital Commentary  |  15 November 2010

Real Return Expectations

There is nothing more important to long-term investors than real returns. Real returns – returns net of inflation – are what eventually fund consumption. The inflationary component of returns only offsets price increases. Read more > 

Investment Executive  |  15 November 2010

The explosion of ETFs

Exchange-traded funds represent the greatest advance in managed money for individual investors since the launch of the modern mutual fund in 1928. ETFs allow the construction of highly diversified, cost- and tax-effective portfolios composed of diverse asset classes. Read more > 

The Globe and Mail  |  15 November 2010

10 things you didn’t know about hedge funds

Early hedge funds got their name because they used to “hedge” against the possibility of the market falling by holding some short positions in which they bet against stocks they felt were overvalued. Read more >

Financial Post: Managing Wealth  |  11 November 2010

Managing the family fortune

Family offices are a unique and growing option for affluent Canadians who are concerned with family wealth preservation and want a coordinated approach to their finances.
In its most general sense, a family office is an entity that solely manages and administers wealth for families of exceptional affluence. Read more > 

Financial Post: Managing Wealth  |  23 October 2010

Time to get real returns

If you were planning to fund your retirement on bonds and GICs, today’s low yields should be sending a chill through your plan.
Interest rates in developed countries have plummeted as the global recovery and employment growth has slowed. Long-term Government of Canada bond yields are languishing at levels not seen since the 1950s. Read more >

Tacita Capital Commentary  |  15 October 2010

Bogus Numbers

Investors today have a right to be confused. A cadre of investment strategists tell them that stocks are cheap, authoritatively declaring that the price-earnings ratio of the S&P 500 index is much lower than the historic average. Yet, another crowd of analysts claim that the market is overvalued, quoting different price-earnings numbers. Who is right? Read more > 

Investment Executive  |  15 October 2010

Emerging markets bonds an option

With interest rates having plummeted to new lows, it’s challenging for financial advisors to find investments that offer higher yields. Read more > 

Financial Post: Managing Wealth  |  09 October 2010

Needless cost of mental games

You and your spouse are standing in line for a play and, to your dismay, you find that you’ve lost the expensive tickets you’d purchased for $300. Do you buy replacement tickets or do you head home in a funk? Read more > 

Financial Post: Managing Wealth  |  25 September 2010

Are your executors ready for your exit

Imagine that you are the victim of a freak accident. While golfing, you are struck by lightning and make an unexpected but dazzling departure from this mortal coil.
Your family is devastated. You are gone and everything you had handled falls on them. And now the litmus test: Is your financial house in order? Or are you leaving your family with a mess? Read more > 

Tacita Capital Commentary  |  15 September 2010

The Myopic Bond Market

It is axiomatic that investors in government bonds expect to earn a return in excess of inflation. Why invest in a bond if it does not increase the purchasing power of one’s capital? Read more >

Investment Executive  |  15 September 2010

Good performance not an anomaly

As the global financial crisis continued to take its toll last year, world economic output declined by 2%. Yet gross domestic product grew by 4.5% in the Asia-Pacific region, excluding Japan, bolstered by strong GDP growth in China and India. Read more >

Financial Post: Managing Wealth  |  04 September 2010

The global students

Buenos Aires, Shanghai, Prague, Rome, London. The academic programs abroad for children of affluence read like a retiree’s dream list for globetrotting.
By the time these teenagers graduate from high school, many of them will have spent several summers abroad earning course credits while being enriched by their exposure to new cultures, languages and people. Read more > 

Tacita Capital Commentary  |  15 August 2010

The Free Lunch Illustrated

One of the most remarkable discoveries in modern finance is the ability to improve the expected return of a portfolio while simultaneously reducing its risk. While the proverbial “free lunch” does exist, its exploitation requires a focus not only on the returns and volatility of the assets in the portfolio but on the degree of covariance between those assets – i.e. the extent to which the returns of the assets move in tandem. All other things being equal, mixing assets that do not move in tandem will improve a portfolio’s risk-adjusted returns. Read more > 

Financial Post: Managing Wealth  |  14 August 2010

Success is in the mix

You should think of your portfolio strategy as a blender that mixes investments to your own unique taste. The asset classes of cash, bonds and equities are the basic ingredients. What you are really blending, however, is the distinctive return and risk profiles of these assets and how they interrelate to each other. Read more >

Financial Post: Managing Wealth  |  31 July 2010

How to avoid costly mistakes of being human

Try your hand at this quiz: “John wears glasses and is highly detailed-oriented. Mathematics was his favourite subject in school. He is somewhat conservative, maybe even a little boring, and prefers an organized work environment. He played basketball in high school and still loves to watch the game today.” Read more > 

Financial Post: Managing Wealth  |  17 July 2010

Rich are rising out of the ashes wiser

Thomas Edison famously stated: “A failure teaches you that something can’t be done — that way.”
Affluent investors, still reeling from the losses of the Great Meltdown, are identifying where their financial advisors failed them and are demanding improvements. Read more > 

Investment Executive  |  15 July 2010

Is Europe the place to be?

The threat of a bond default by Greece sent tremors through stock markets in May as investors reacted to the prospect of a renewed credit crisis centred on sovereign debt, diminished global growth and even the possible breakup of the European Union. Read more >

Investment Executive  |  15 July 2010

Talking to your clients about risk

Among the most important types of guidance good financial advisors offer is in helping their clients make the trade-off between risk and return that is right for them. Read more > 

Financial Post: Managing Wealth  |  03 July 2010

Legacy stash easily blown

An ancient Chinese proverb claims that “wealth does not pass three generations.” Most cultures have similar sayings about the limited life of family wealth. The American “shirtsleeves to shirtsleeves in three generations” is thought to have evolved from the old Lancashire proverb “there’s nobbut three generations atween a clog and clog.” The Italian saying “from stables to stars to stables” grasps the transitory nature of family wealth in particularly vivid terms. Read more > 

Financial Post: Managing Wealth  |  19 June 2010

While bulls and bears clash, the wise win

There is a great debate going on among money managers that has enormous ramifications for affluent investors.
On one side, the bears argue that the bill for a three-decade orgy of borrowing in Western society has now come due. That the massive monetary and fiscal stimulus by governments only postponed the day of reckoning and that the deflationary forces of deleveraging will eventually overwhelm the current recovery. Read more >

Tacita Capital Commentary  |  15 June 2010

And the Winner Is

As investors rush into U.S. Treasuries in response to a weakening economy that may portend the onset of deflation, this begs the question whether there is a superior deflationary hedge. History can be instructive in this regard. Read more >  

Investment Executive  |  15 June 2010

The investment cachet of cash

Improving employment, reduced capacity overhang and a bubbly residential real estate market have dramatically increased the odds that the Bank of Canada will initiate a new rising interest rate cycle. Read more >

Financial Post: Managing Wealth  |  05 June 2010

Wealthy investors still recovering from the fight

Battered, worried and cautious. That seems to be the mindset of wealthy investors these days, based on the results of a recent global survey of 2,000 high-net-worth investors by Barclay’s Wealth.
Indeed, respondents were generally gloomier than professional economists. Only about one in five of the high-net-worth individuals expected any sustained growth in the world economy over the next few years, while nearly 30% expect deterioration. Read more >

Financial Post: Managing Wealth  |  22 May 2010

Volatility risk vs. longevity risk

It’s a scary world. The threat of a bond default by Greece, a tiny country with an economy smaller than Ontario’s, has sent tremors through the world’s stock markets. With other Mediterranean countries sliding towards the fiscal abyss, fear has become contagious. Investors worry that even the trillion-euro loan package won’t salvage the situation. Then, in the midst of this global drama, the Dow Jones plunges nearly 1,000 points, an intraday record. Read more > 

Tacita Capital Commentary  |  15 May 2010

The Real Deal

It is easy to forget the picture of long-term economic growth given today’s turbulent markets. In 1925, the U.S. gross domestic product was $90.6 billion. By 2009, the GDP had grown to $14.3 trillion. This equates to a staggering 157-fold increase as a 6.2% annual average growth compounded over 84 years (see the following graph). Read more > 

Financial Post: Managing Wealth  |  09 May 2010

Investors destined to repeat mistakes

If the definition of insanity is doing the same thing over and over again and expecting a different result, many investors seem to be a touch mad.
As the inevitable bull and bear market cycles occur, many investors routinely “buy high and sell low,” yet wonder why their portfolio performance is poor. Read more > 

Financial Post: Managing Wealth  |  24 April 2010

Where Paris’s parents may have gone wrong

Several generations ago, the prevailing belief was “spare the rod and spoil the child.” Today, a more apt adage is “spare the budget and spoil the child.”
At least that sums up the advice some experts have given affluent parents who are troubled about the negative impact wealth can have on their children. Read more > 

Tacita Capital Commentary  |  15 April 2010

The Bond Roller Coaster

Investors have benefited over the past three decades from an unprecedented bull market in bonds since long-term government bond yields peaked at 14.8% in September 1981. Aggressive monetary tightening by Paul Volcker, Chairman of the Federal Reserve at that time, drove inflation from double-digit levels in 1981 to less than 3% in 1983. Continued vigilance by the Federal Reserve combined with deregulation, globalization and, until recent years, lower oil prices set a trend of disinflation and lower interest rates firmly in place. Read more >

Financial Post: Managing Wealth  |  10 April 2010

A new kind of money coach

I was chatting recently with a successful entrepreneur about his approach to investing. “You know what I hate the most?” he asked. “Every month or so, I sit down on a weekend and go through the reams of statements I receive from my various money managers and brokers. If I don’t do it, I feel like I’m negligent, but when I do it, I’m not sure what I should be looking for.” Read more >

Financial Post: Managing Wealth  |  27 March 2010

Lessons from the big guys

What do the world’s largest sovereign fund and the largest U.S. pension fund have in common? Sure, they both manage hundreds of billions of dollars. And yes, they both enjoy access to some of the world’s smartest investment minds. Read more >

Tacita Capital Commentary  |  15 March 2010

The Price of Emotion

Successful investing is built on twin pillars – diversification and self-control. Crafting a thoughtfully diversified strategy but not sticking to it is like having a fitness program without discipline – long on promise and short on results. Behavioural finance experts have identified a litany of cognitive biases that can distort investor decision-making and disrupt adherence to a sound strategy. Read more >

Investment Executive  |  15 March 2010

Going global reduces volatility

The superior performance of the Canadian stock market relative to its global counterparts over the past decade has left some financial advisors doubting the wisdom of global equities diversification. Read more >

Financial Post: Managing Wealth  |  13 March 2010

Nothing succeeds like a succession plan

When it comes to wealth planning, many high-net-worth individuals seem to share the cockeyed optimism of Stephen Wright, who famously said: “I intend to live forever. So far, so good.” Read more >

Financial Post: Managing Wealth  |  27 February 2010

Watch out for that tax tail

There is an old saying that you should not let the tax tail wag the investment dog. However, without proper planning, high net worth investors – whose wealth extends well beyond traditional RRSP’s – may find that the bite of taxes can leave them with Chihuahua-sized after-tax returns. Read more > 

The Globe and Mail  |  25 February 2010

Lighting the way out

Over nearly two decades, the Kolewaskis have succeeded in turning a small hardware store in Cold Lake, Alta., into a thriving multimillion-dollar enterprise. But the real accomplishment has been the seamless ownership transition that is nearing completion. Read more > 

Investment Executive  |  15 February 2010

Need diversification? Look to REITS

Financial advisors looking to enhance the diversification of their clients’ portfolios need to consider real estate investment trusts. Read more >

Financial Post: Managing Wealth  |  13 February 2010

Lost Decade wasn’t so bad for serious investors

It’s being called the Lost Decade — a dismal 10-year stretch from 2000 to 2009, when the average owner of U.S. stocks lost money. If US$1,000 was invested in the S&P 500 on the first day of the new millennium, it was worth only US$909 on Dec. 31, 2009, equating to a loss of -1.0% a year. Read more > 

Financial Post: Managing Wealth  |  26 January 2010

Money can’t buy happiness. Really.

Money can’t buy you love, but it also doesn’t buy much happiness. At least, that is what psychologists studying the causes of happiness have found. Money is important for meeting basic needs such as food and a roof over one’s head, but once these needs are satisfied, more money doesn’t necessarily lead to higher levels of happiness.
Read more > 

Tacita Capital Commentary  |  15 January 2010

Give Bernanke a Break

As populist politicians, long on hypocritical outrage and short on fiscal rectitude, begin the witch hunt for the parties to blame for the Great Recession, fingers are being pointed at Federal Reserve Chairman Ben Bernanke. Read more > 

Investment Executive  |  15 January 2010

The skinny on gold

As fears of inflation and escalating government debt mount, gold is being highlighted as an asset that can hedge these risks. To assess the portfolio role of gold, my firm, Tacita Capital Inc. of Toronto, analyzed its long-term returns and volatility (in Canadian dollars), its correlation to inflation and surveyed the current product environment. Read more >

Financial Post: Managing Wealth  |  26 December 2009

A wealth action plan for 2010

At the end of a busy year, many affluent individuals vow to get on top of their financial affairs. Sadly, they are often no more successful than they are at keeping their New Year’s resolutions. Like those extra pounds that survive annual January commitments to diet and exercise, a muddle of financial issues and administrative loose ends can easily endure year after year. Read more >

Financial Post: Managing Wealth  |  12 December 2009

Keeping the wealth all in the family

Some people win the “gene lottery” and inherit their wealth. A handful of mega-earners such as top athletes and entertainers save their way to wealth. The source of most family wealth, however, is a successful business. The concentrated ownership of risky business assets is usually the route to serious money; diversification comes later. Read more >

Financial Post: Managing Wealth  |  28 November 2009

The wise rich know about risk

You can’t manage what you can’t measure. Thoughtful wealthy investors have learned this adage applies to managing investment capital as much as it applies to running a business. If meaningful benchmarks and other investment measures aren’t defined at the outset, managing the family money can turn into an emotionally driven series of ad hoc actions and reactions that almost guarantee unwelcome costs and taxes on top of disappointing returns. Read more > 

Investment Executive  |  15 November 2009

A winning portfolio

Building a portfolio that beats the broad market indices over the long run is a daunting task for advisors. One asset class that forms the foundation of any such portfolio is Canadian value stocks, according to analysis by Toronto-based Tacita Capital Inc. Read more > 

Tacita Capital Commentary  |  15 November 2009

Routinely Under Water

Investors, fondly recalling the October 2007 high in the U.S. stock market, are undoubtedly anxious to see a full recovery of their capital. This is understandable. Read more >

Financial Post: Managing Wealth  |  14 November 2009

How the rich stay richer

I’ll let you in on a little secret: Wealthy investors do not have any more insight into where the market is going than the typical Main Street investor. Read more > 

CA Magazine  |  01 November 2009

Getting back in the game

As investors try to pick up the pieces, there is an opportunity for CAs to help clients reevaluate their strategy and investment philosophy. Read more >

Financial Post: Managing Wealth  |  31 October 2009

Planning ahead a capital idea

You can’t take it with you. As aging Baby Boomers confront the harsh reality of actuarial tables, this adage takes on real meaning. Planning today must go beyond retirement and embrace the fact that we all eventually, as Shakespeare wrote, “shuffle off this mortal coil.” Wealthy families in particular, due to the size and complexity of their balance sheets, need to soberly consider the implications of this final certainty. Read more > 

Financial Post: Managing Wealth  |  17 October 2009

Arrival of the deca-millionaire

Millionaire. The word still has cachet despite decades of inflation debasing its lustre. According to research firm Investor Economics, in 2008 nearly a half million households in Canada were in the enviable position of having at least $1-million in investable assets. The overwhelming majority, nearly 95%, had between $1-million and $10-million. Read more >

Investment Executive  |  15 October 2009

U.S. small caps can boost returns

With returns in the past decade so dismal, advisors need to examine options to enhance long-term portfolio performance. Read more >

Investment Executive  |  14 October 2009

Great reasons for going global

Two decades ago, international investing was in vogue. The stunning growth of Japan and the ongoing expansion of the European Union had created a compelling investment thesis. Read more > 

Financial Post: Managing Wealth  |  03 October 2009

You may not be as rich as you think

For business owners who ultimately decide to liquidate the business they toiled away for decades to build, the influx of a multi-million-dollar portfolio can be quite liberating. There is now time to stretch one’s wings and fulfill those many dreams there was never room for before. Read more >

Investment Executive  |  15 August 2009

Diversifying client portfolios

With the painful losses of the recent bear market still fresh, many advisors are examining their investment strategies to improve the diversification in their clients’ portfolios. Read more >

Investment Executive  |  15 July 2009

High-yield bonds raise yellow flags

With long-term capital appreciation numbers in the red and stocks facing uncertain growth prospects, many advisors are exploring income-oriented options in the hope of bolstering future performance. Read more > 

Tacita Capital Commentary  |  15 June 2009

The Bond Hedge

For the long-term investor, risk is not about volatility – it is about a long-drawn-out period of dismal stock returns. Investors in U.S. equities are suffering the full brunt of this reality, as evidenced by the following graph that depicts the cumulative value of $1.00 invested in the S&P 500. Investors have endured eleven years of ups and downs to find they are back to where they were in March 1998. Read more >

Tacita Capital Commentary  |  15 May 2009

Japan’s Cautionary Tale

As the powerful stock market rally that began in early March continues unabated, investors need to keep a grip on their optimism and consider the possibility of a protracted period of lacklustre growth and deflationary pressures. Read more >

Financial Post  |  21 April 2009

It’s a recession, not a depression

As jobless rates skyrocket, numerous pundits have raised the spectre of the Great Depression, capturing headlines and garnering lucrative speaking venues as they prophesize inevitable devastation. Read more >

Financial Post  |  15 April 2009

The book your bank doesn’t want you to read

As jobless rates skyrocket, numerous pundits have raised the spectre of the Great Depression, capturing headlines and garnering lucrative speaking venues as they prophesize inevitable devastation. Read more > 

Tacita Capital Commentary  |  15 April 2009

The Big Picture

Has the market bottomed out? Is the recent market rise just a bear market rally? Should you wait a few months to see if the economy recovers before you invest? Questions abound as pundits in the media spew forth short-term prognostications. The Dow at 1000 or 10,000 – take your pick. Read more > 

Investment Executive  |  15 March 2009

Does hedging mean better returns

The stunning appreciation of the Canadian dollar from a low of US62¢ in January 2002 to a 13-decade high of US$1.09 in November 2007 dramatically undercut U.S. equity returns. Read more > 

Tacita Capital Commentary  |  15 March 2009

The Great Recession

As jobless rates skyrocket, numerous pundits have raised the spectre of the Great Depression, capturing headlines and garnering lucrative speaking venues as they prophesize inevitable devastation. Already overwhelmed by painful losses, many investors capitulate, preferring the refuge of cash to the prospect of utter ruin. Read more >

Tacita Capital Commentary  |  15 February 2009

The Money Illusion

The current deep recession has sent consumer prices spiralling downwards and, as illustrated in the following graph, inflation rates are now firmly in negative territory. Read more > 

Tacita Capital Commentary  |  15 January 2009

You Are Not as Poor as You Think

2008 was a year for the record books. Nearly every major asset class suffered record calendar year losses with several approaching 50 percent. Read more >

Financial Post: Managing Wealth  |  09 January 2009

It’s that big tomato you’ll want

There’s an old saying that if you want to win a contest for growing the largest tomato, paint a cantaloupe red and hope the judges don’t notice. Serious investors keep this principle in mind when they evaluate their investment managers. They don’t only look at performance, but also seek to identify the risks taken by a manager in order to sort the real performers — the large tomatoes — from the painted cantaloupes. Read more > 

Tacita Capital Commentary  |  15 December 2008

The Fear Bubble

Asset bubbles, when prices zoom to irrational levels, are typically associated with investor manias. The technology bubble of the late 1990’s is a recent example where investors stampeded into tech stocks, pushing prices to extraordinary levels before the inevitable crash that followed. Read more > 

Tacita Capital Commentary  |  15 November 2008

Anatomy of a Recovery

Recent market volatility underscores the risk associated with attempting to predict market turning points – one day can mean a return difference up to 10%. Read more >

Tacita Capital Commentary  |  15 October 2008

Lessons from the Past

No one knows exactly how this bear market and the inevitable recovery will play out. However, the past can give us insights into how events might unfold. Read more > 

White Paper for Terrapinn Hedge Funds World Canada 2008 Conference  |  08 October 2008

Canadian Market Developments

In order to provide insights into the Canadian hedge fund industry, Tacita Capital undertook a statistical analysis of the monthly returns of the Scotia Capital Canadian Hedge Fund Performance Index since its inception, the 43 month period from January 2005 through July 2008. Read more >

CA Magazine  |  01 December 2007

Core and satellite

The sizzling returns of the Canadian stock market over the past few years have obscured the looming investment challenge facing retirement bound baby boomers. Read more >