MAKING CENTS OF THE MARKET
AUGUST | 2010
MAKING CENTS OF THE MARKET WHAT IS YOUR INVESTMENT STYLE? If you’re like most investors, you probably haven’t given much thought about what investment style is. Investment style can be defined as the method that managers use to buy stocks and other assets. So when choosing an investment manager, it’s important to understand their style to make sure it fits your risk-reward expectations. Here is a look at some common investment styles among fund managers:
Lori Pinkowski, CIM, FCSI Associate Portfolio Manager Senior Vice President T: 604-659-8047 [email protected]
Growth vs. Value - Active managers can be divided into growth or value seekers. The growth style manager prefers to invest in fast-growing firms - they target industry sectors that are enjoying above-average growth in the economy and look for the best companies in those sectors to invest in. Value style managers will focus on buying underpriced industry leaders - they target companies that have underlying strength that are generally unrecognized by the marketplace. Active vs. Passive - Active managers believe in their ability to outperform the overall market or relative benchmark by picking stocks they believe may perform well. Passive managers feel that simply investing in a market index fund may produce potentially higher long-term results. They construct the portfolio and continuously rebalance such that it mimics the index. Momentum vs. Contrarian - Momentum managers seek stocks that have experienced growth in earnings or upward price movement. They believe that stocks that have done well in the recent past will continue to do well. Contrarian managers do the opposite. They look to buy stocks that are out of favor and sell those that have risen sharply. Top-Down vs. Bottom-Up - Top-Down managers tend to look at the “big picture” in the economy and financial world, and then find out which indsutries will do well in the given economy. At that point, they will purchase stocks in companies they feel will perform well in the given sector. Bottom-up managers choose stocks based on the strength of an individual company, regardless of what is happening in the economy as a whole or the sector the company belongs in. This style is also known as “stock picking.”
Seth Allen, BBA Associate Portfolio Manager Senior Vice President T: 604-659-8051 [email protected]
Raymond James Ltd. 23rd Floor, 925 West Georgia Vancouver, BC V6C 3L2 www.pinkowski.ca www.raymondjames.ca
Strategic vs. Tactical - Strategic managers will create a portfolio with a mix of assets that will provide a balance between expected risk and return for a long-term investment horizon. For example, if the investor’s long term objectives and risk tolerance is best served by a 60% equity and 40% fixed income portfolio, this will not change unless their investment objectives and risk tolerance change significantly (e.g. win the lottery, retire or any change that make the previous plan inappropriate. Tactical managers aren’t as rigid, and will make changes regularly to a portfolio to adapt to changing market conditions Quantitative - This style relies heavily on computers for mathematical and statistical modeling. The idea is to remove all emotions from the process and have a computer check through enormous amounts of data to discover unrealized potential. This is a purely technology based means of stock picking or asset selection.
CKNW, Lori Pinkowski & Raymond James Ltd. present the
VANCOUVER INVESTMENT SUMMIT 2010
Investing in the New Decade Join us to hear how 5 of Canada’s top Investment Managers successfully navigated through the toughest markets in recent history and learn their strategies for investing in the next decade. • Protecting portfolios in volatile markets • Income-producing strategies
• Top sectors and stocks in 2011 and beyond • Why buy and hold will not work in today’s markets
Saturday, September 25, 2010 8:00AM - 4:00PM Four Seasons Hotel Vancouver PORTFOLIO
MANAGER
Barometer High Income* Sentry Canadian Income**
Vertex Fund**
1YR
3YR
David Burrows
19.70%
7.90%
Sandy McIntyre
23.03%
1.26%
John Thiessen
Picton Mahoney Long Short** Guardian Diversified Income*
ANNUALIZED RETURNS AS OF JUNE 30
Michael Mahoney John Priestman
34.47% 15.71% 15.80%
3.77% 4.27% 2.90%
Source: *Rogerscasey Quarterly, annualized returns as of June 30, 2010; **Globe Investor. Annualized returns as of June 30, 2010
5YR
SINCE INCEPTION
9.30%
12.70% (2001)
5.83%
11.69% (2002)
10.21% n/a
7.40%
18.65% (1998) 13.15% (2005) 10.50% (1996)
Purchase tickets by phone at 1.888.222.6608 or online at www.ticketweb.ca. If you would like assistance with purchasing your tickets, please call Karen at 604.659.8062. For more information, please visit www.VancouverInvestmentSummit.com or call 604.915.LORI (5674)
Thank You (Again) to Our Clients
Raymond James Ltd. is ranked “Highest in Investor Satisfaction With Full Service Brokerage Firms in Canada, Two Years in a Row” in the J.D. Power and Associates 2010 study.* For the second consecutive year, our clients have given us this special recognition. The dedication of our people to our clients’ needs made it possible. Thank you to all for this tremendous honour.
Listen to Lori every Friday at 5:35 p.m. on CKNW 980AM Listen to “Making Cents of the Market” every Friday on “The World Today” with Jon McComb where Lori will discuss breaking stock market news, information and headlines for the week. If you have missed any of her previous segments please visit www.pinkowski.ca. * Raymond James Ltd. received the highest numerical score among full service brokerage firms in the proprietary J.D. Power and Associates 2009-2010 Canadian Full Service Investor Satisfaction StudiesSM. 2010 study based on 6,486 total responses measuring 14 brokerage firms and measures opinions of investors who used fullservice investment institutions. Proprietary study results are based on experiences and perceptions of consumers surveyed May 2010. Your experiences may vary. Visit jdpower.com. Raymond James Ltd. is a member of the CIPF. This newsletter has been prepared by the Pinkowski Allen Group and expresses the opinions of the authors and not necessarily those of Raymond James Ltd. (RJL). Statistics and factual data and other information in this newsletter are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. This newsletter is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., member CIPF. Financial planning and insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member CIPF.
MAKING CENTS OF THE MARKET WHAT IS YOUR INVESTMENT STYLE? If you’re like most investors, you probably haven’t given much thought about what investment style is. Investment style can be defined as the method that managers use to buy stocks and other assets. So when choosing an investment manager, it’s important to understand their style to make sure it fits your risk-reward expectations. Here is a look at some common investment styles among fund managers:
Lori Pinkowski, CIM, FCSI Associate Portfolio Manager Senior Vice President T: 604-659-8047 [email protected]
Growth vs. Value - Active managers can be divided into growth or value seekers. The growth style manager prefers to invest in fast-growing firms - they target industry sectors that are enjoying above-average growth in the economy and look for the best companies in those sectors to invest in. Value style managers will focus on buying underpriced industry leaders - they target companies that have underlying strength that are generally unrecognized by the marketplace. Active vs. Passive - Active managers believe in their ability to outperform the overall market or relative benchmark by picking stocks they believe may perform well. Passive managers feel that simply investing in a market index fund may produce potentially higher long-term results. They construct the portfolio and continuously rebalance such that it mimics the index. Momentum vs. Contrarian - Momentum managers seek stocks that have experienced growth in earnings or upward price movement. They believe that stocks that have done well in the recent past will continue to do well. Contrarian managers do the opposite. They look to buy stocks that are out of favor and sell those that have risen sharply. Top-Down vs. Bottom-Up - Top-Down managers tend to look at the “big picture” in the economy and financial world, and then find out which indsutries will do well in the given economy. At that point, they will purchase stocks in companies they feel will perform well in the given sector. Bottom-up managers choose stocks based on the strength of an individual company, regardless of what is happening in the economy as a whole or the sector the company belongs in. This style is also known as “stock picking.”
Seth Allen, BBA Associate Portfolio Manager Senior Vice President T: 604-659-8051 [email protected]
Raymond James Ltd. 23rd Floor, 925 West Georgia Vancouver, BC V6C 3L2 www.pinkowski.ca www.raymondjames.ca
Strategic vs. Tactical - Strategic managers will create a portfolio with a mix of assets that will provide a balance between expected risk and return for a long-term investment horizon. For example, if the investor’s long term objectives and risk tolerance is best served by a 60% equity and 40% fixed income portfolio, this will not change unless their investment objectives and risk tolerance change significantly (e.g. win the lottery, retire or any change that make the previous plan inappropriate. Tactical managers aren’t as rigid, and will make changes regularly to a portfolio to adapt to changing market conditions Quantitative - This style relies heavily on computers for mathematical and statistical modeling. The idea is to remove all emotions from the process and have a computer check through enormous amounts of data to discover unrealized potential. This is a purely technology based means of stock picking or asset selection.
CKNW, Lori Pinkowski & Raymond James Ltd. present the
VANCOUVER INVESTMENT SUMMIT 2010
Investing in the New Decade Join us to hear how 5 of Canada’s top Investment Managers successfully navigated through the toughest markets in recent history and learn their strategies for investing in the next decade. • Protecting portfolios in volatile markets • Income-producing strategies
• Top sectors and stocks in 2011 and beyond • Why buy and hold will not work in today’s markets
Saturday, September 25, 2010 8:00AM - 4:00PM Four Seasons Hotel Vancouver PORTFOLIO
MANAGER
Barometer High Income* Sentry Canadian Income**
Vertex Fund**
1YR
3YR
David Burrows
19.70%
7.90%
Sandy McIntyre
23.03%
1.26%
John Thiessen
Picton Mahoney Long Short** Guardian Diversified Income*
ANNUALIZED RETURNS AS OF JUNE 30
Michael Mahoney John Priestman
34.47% 15.71% 15.80%
3.77% 4.27% 2.90%
Source: *Rogerscasey Quarterly, annualized returns as of June 30, 2010; **Globe Investor. Annualized returns as of June 30, 2010
5YR
SINCE INCEPTION
9.30%
12.70% (2001)
5.83%
11.69% (2002)
10.21% n/a
7.40%
18.65% (1998) 13.15% (2005) 10.50% (1996)
Purchase tickets by phone at 1.888.222.6608 or online at www.ticketweb.ca. If you would like assistance with purchasing your tickets, please call Karen at 604.659.8062. For more information, please visit www.VancouverInvestmentSummit.com or call 604.915.LORI (5674)
Thank You (Again) to Our Clients
Raymond James Ltd. is ranked “Highest in Investor Satisfaction With Full Service Brokerage Firms in Canada, Two Years in a Row” in the J.D. Power and Associates 2010 study.* For the second consecutive year, our clients have given us this special recognition. The dedication of our people to our clients’ needs made it possible. Thank you to all for this tremendous honour.
Listen to Lori every Friday at 5:35 p.m. on CKNW 980AM Listen to “Making Cents of the Market” every Friday on “The World Today” with Jon McComb where Lori will discuss breaking stock market news, information and headlines for the week. If you have missed any of her previous segments please visit www.pinkowski.ca. * Raymond James Ltd. received the highest numerical score among full service brokerage firms in the proprietary J.D. Power and Associates 2009-2010 Canadian Full Service Investor Satisfaction StudiesSM. 2010 study based on 6,486 total responses measuring 14 brokerage firms and measures opinions of investors who used fullservice investment institutions. Proprietary study results are based on experiences and perceptions of consumers surveyed May 2010. Your experiences may vary. Visit jdpower.com. Raymond James Ltd. is a member of the CIPF. This newsletter has been prepared by the Pinkowski Allen Group and expresses the opinions of the authors and not necessarily those of Raymond James Ltd. (RJL). Statistics and factual data and other information in this newsletter are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. This newsletter is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., member CIPF. Financial planning and insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member CIPF.
