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February continued the market’s winning streak, seeing a fresh round of new all-time highs for many of our holdings. We remain optimistic about the current economic climate, particularly given the supportive fiscal policies driving ongoing growth in the USA. With the market’s strength since December, we anticipate a continuation of strong gains into year-end.
This month, our attention turns to reviewing the investment strategy guiding the Income Portfolio. Our objective within this portfolio is twofold: to generate a consistent monthly income while fostering long-term capital growth. To achieve this, we focus on carefully selected Exchange Traded Funds (ETFs) that offer monthly distributions and exhibit stable, upward trends with minimal volatility.
Initially, we concentrate on ETFs traded on Canadian markets, prioritizing those that provide monthly distributions. While these ETFs are denominated in Canadian dollars, they offer exposure to a diverse range of asset classes, sectors, geographies, styles, market caps, and thematic investments. For those seeking further insight into ETFs, a comprehensive overview is available at https://www.vanguard.ca/en/investor/learn/featured-group/basics/what-are-etfs.
Within this group, we select only those ETFs that demonstrate lower volatility compared to the broader market. Numerous studies have highlighted the significance of low volatility in extending the longevity of investment portfolios, particularly in the context of making regular withdrawals.
Next, we assess the strength of each ETF’s price trend, prioritizing those displaying strong growth. In exclusively owning assets with strong uptrends, we enhance the likelihood of realizing favourable long-term returns.
We run this process on a monthly basis, with the top three ETFs meeting our stringent criteria earning a place in the portfolio. Typically, these three ETFs provide diversified exposure to 40 to 60 individual holdings.
Finally, each ETF is assigned a price alert level based on historical volatility and trading price. Should this level be breached, we promptly divest from the ETF to safeguard capital, reallocating the proceeds to the next viable opportunity meeting our criteria. These disciplined measures ensure we remain proactive and adaptable to market dynamics, aiming for a well-managed, focused, and high-quality portfolio.
In regards to administrative matters, client tax packages are currently being prepared and will be sent once all documents are ready. Income Portfolio investors should expect documents towards the end of March as we await various T3 reports from the ETF companies. Also, moving forward, this note will be published on the fifth business day of each month. This adjustment will afford us additional time to better capture any month-end activities. Please expect the next note on April 5th at 4pm.
Model Portfolio Highlights
Growth Portfolio
In February we exited Tesla as the stock saw an increase in volatility. We replaced the position with Colliers Group, one of the world’s largest real estate services companies.
American Growth Portfolio
In February we exited Tesla and Docusign on an increase in volatility. We purchased new positions in medical diagnostics companies Danaher and Edwards Lifesciences.
Income Portfolio
We made no changes to the holdings in February.
Small Cap Portfolio
We sold Richard’s Packaging, Real Matters, Sangoma, Wesdome, Andrew Peller, Kits Eyecare, Dream Unlimited and Well Health. We initiated new positions in Kneat, Champion Iron, and Storagevault. We added to existing positions in Uranium Royalty Corp, Converge, and Pollard Banknote. Small caps saw a fair amount of rotation in February as higher-quality small caps saw significant improvement in their uptrends, aligning with our criteria for portfolio inclusion. We anticipate that these changes will enhance the fundamental character of the portfolio, particularly in terms of profitability, return on equity, and free cash flow growth.
Across all portfolios we look for mispriced opportunities, considering only those with a significant margin of safety and minimal risk of permanent capital loss. After identifying such opportunities, patience is the most important factor in realizing our expected long term return.
If you have any questions about your portfolio, financial planning or investments please be in touch. If you’d like to add a friend or family to this email list, please let me know. Click to book a meeting: https://calendly.com/bwk-wapw
Thank you.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book a meeting
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
Market Commentary
March 2024 Update
Join the mailing list here
February continued the market’s winning streak, seeing a fresh round of new all-time highs for many of our holdings. We remain optimistic about the current economic climate, particularly given the supportive fiscal policies driving ongoing growth in the USA. With the market’s strength since December, we anticipate a continuation of strong gains into year-end.
This month, our attention turns to reviewing the investment strategy guiding the Income Portfolio. Our objective within this portfolio is twofold: to generate a consistent monthly income while fostering long-term capital growth. To achieve this, we focus on carefully selected Exchange Traded Funds (ETFs) that offer monthly distributions and exhibit stable, upward trends with minimal volatility.
Initially, we concentrate on ETFs traded on Canadian markets, prioritizing those that provide monthly distributions. While these ETFs are denominated in Canadian dollars, they offer exposure to a diverse range of asset classes, sectors, geographies, styles, market caps, and thematic investments. For those seeking further insight into ETFs, a comprehensive overview is available at https://www.vanguard.ca/en/investor/learn/featured-group/basics/what-are-etfs.
Within this group, we select only those ETFs that demonstrate lower volatility compared to the broader market. Numerous studies have highlighted the significance of low volatility in extending the longevity of investment portfolios, particularly in the context of making regular withdrawals.
Next, we assess the strength of each ETF’s price trend, prioritizing those displaying strong growth. In exclusively owning assets with strong uptrends, we enhance the likelihood of realizing favourable long-term returns.
We run this process on a monthly basis, with the top three ETFs meeting our stringent criteria earning a place in the portfolio. Typically, these three ETFs provide diversified exposure to 40 to 60 individual holdings.
Finally, each ETF is assigned a price alert level based on historical volatility and trading price. Should this level be breached, we promptly divest from the ETF to safeguard capital, reallocating the proceeds to the next viable opportunity meeting our criteria. These disciplined measures ensure we remain proactive and adaptable to market dynamics, aiming for a well-managed, focused, and high-quality portfolio.
In regards to administrative matters, client tax packages are currently being prepared and will be sent once all documents are ready. Income Portfolio investors should expect documents towards the end of March as we await various T3 reports from the ETF companies. Also, moving forward, this note will be published on the fifth business day of each month. This adjustment will afford us additional time to better capture any month-end activities. Please expect the next note on April 5th at 4pm.
Model Portfolio Highlights
Growth Portfolio
In February we exited Tesla as the stock saw an increase in volatility. We replaced the position with Colliers Group, one of the world’s largest real estate services companies.
American Growth Portfolio
In February we exited Tesla and Docusign on an increase in volatility. We purchased new positions in medical diagnostics companies Danaher and Edwards Lifesciences.
Income Portfolio
We made no changes to the holdings in February.
Small Cap Portfolio
We sold Richard’s Packaging, Real Matters, Sangoma, Wesdome, Andrew Peller, Kits Eyecare, Dream Unlimited and Well Health. We initiated new positions in Kneat, Champion Iron, and Storagevault. We added to existing positions in Uranium Royalty Corp, Converge, and Pollard Banknote. Small caps saw a fair amount of rotation in February as higher-quality small caps saw significant improvement in their uptrends, aligning with our criteria for portfolio inclusion. We anticipate that these changes will enhance the fundamental character of the portfolio, particularly in terms of profitability, return on equity, and free cash flow growth.
Across all portfolios we look for mispriced opportunities, considering only those with a significant margin of safety and minimal risk of permanent capital loss. After identifying such opportunities, patience is the most important factor in realizing our expected long term return.
If you have any questions about your portfolio, financial planning or investments please be in touch. If you’d like to add a friend or family to this email list, please let me know. Click to book a meeting: https://calendly.com/bwk-wapw
Thank you.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book a meeting
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.