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So how did the Invisor investment portfolios perform in 2015?

by Invisor Last updated on December 16, 2015 Tags: Market & News Updates

With a year in the books we wanted to share information on the performance of four groups of investment portfolios under which we classified our client accounts. We formed the four groups – Aggressive, Growth-Seeking, Moderate & Conservative – based on the nature of each individual client account and the investment goals.  The Aggressive group is comprised of investment portfolios that have the most amount of equity exposure, while the Conservative group has the least amount of exposure to equities.

While the four portfolio groups we are highlighting have varying exposures to risk and market volatility, and hold different securities, our strategy for selecting the securities is consistent across the board. Our strategy is to use a mix of equity and fixed income exposures to arrive at a certain target portfolio risk and return characteristics that align with client goals. Within each of the equity and fixed income asset classes, we use sub-asset classes such as U.S. Equity, International Equity, Canadian Equity, Government, Provincial and Corporate bonds, to diversify the portfolios.

The message across the four portfolio groups is consistent. With the right kind of diversification across various asset classes, you increase the likelihood that your investment portfolio will perform at least in line with the market, if not better, at a risk level that is lower than the market. In other words, by spreading your investments across many different asset classes we minimize the risk in your portfolio, while seeking to maximize returns. 

Below is the performance data of our investment portfolio groups:

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* Performance data for Aggressive and Growth Seeking portfolios are based on actual client portfolios after considering all costs of investing.  Performance numbers for the Moderate and Conservative portfolios pertain to model portfolios (since actual client portfolios in these groups had not completed one full year as of the date of performance calculations) after considering fund MERs, but without considering Invisor management fees and other trading expenses.

The key contributors to our portfolios’ performance this past year are outlined below:

Positive Contributors

U.S. Dollar (USD) – Our U.S. Equity holdings are held directly in USD with no currency hedges. Over the past year, the USD has appreciated by about 15% over the Canadian Dollar which has boosted our portfolio returns.

U.S. Equities – Despite a global slowdown in growth, equities in the U.S. performed well and better than many of the other regions in the world. A consumer spending increase driven by solid fundamentals and strong business growth were the main drivers.

Fixed Income – Despite historically low yields on bonds, global uncertainty pushed yields even lower over the past year, which drove bond prices higher.

Negative Contributors

Canadian Equities – The large drop in oil and commodity prices over the past year had a large impact on the Canadian economy, which is significantly dependent on the energy and commodities sectors.  The TSX was down about 10% over the past year relative to the MSCI World Index which was up about 2%.  Our allocation in Canada to higher dividend paying stocks outperformed the TSX by 2% over the year.

Takeaway

Year over year, we are going to see different asset classes perform stronger than others. While some predictions may turn out right, others will not. In the long-run, the simplest way to capitalize on a low-growth, low-return environment with higher market volatility, is to hold a diversified portfolio, keep your costs low and save regularly. Diversification reduces the risk in a portfolio by ensuring all of your eggs aren’t in one basket. Keeping your costs low leaves more money in your account and helps grow your portfolio faster. Regular savings generally helps in achieving a lower cost base for your investments when markets are volatile. 

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