Manager Insight: Balanced Fund Perspectives with Tony Elavia and

MANAGER INSIGHT:
BALANCED FUND PERSPECTIVES WITH TONY ELAVIA AND ALAIN BERGERON
How are you evolving traditional balanced funds for
today’s markets?
• The goal of our eight balanced funds is to maximize risk-adjusted returns in an
ever more complex market
• We have added a dedicated Asset Allocation Team to help reduce risk and enhance
performance potential from a top-down perspective, while allowing our fixed
income and equity teams to focus on what they do best, which is security selection
• We now also seek to add incremental value by overlaying a third team dedicated
solely to asset allocation
What is the role of the asset allocator?
• Asset allocation is not something we do on a part-time basis; we have a
dedicated team constantly conducting research, refining our inputs and evolving
our models to adapt to market conditions
What do you expect will be the primary driver of returns?
• We believe that security selection and portfolio construction are the main drivers
of excess return
• Asset allocation aims to add incremental value over time – above what is
achieved with a neutral asset mix
• For example, if we were to overweight equities by 3% and stocks outperform by
10%, then that would generate an additional 0.30% return over the neutral asset mix
• The Asset Allocation Team uses a systematic process to determine when and by
how much to overweight or underweight the equity portion of the portfolio relative
to a “neutral” target asset mix (i.e., no preference to overweight equities or fixed
income relative to the “neutral” target asset mix)
What is your current outlook?
• The Asset Allocation Team is designed for multi-asset class investing and includes
six investment professionals
• Equities are expensive, but the macro-economic environment is mixed to
supportive; investor sentiment is favourable, and the market has a positive price
trend and appears fairly robust
How do you decide asset allocation “tilts”?
• Our asset mix will change or “tilt” in favour of fixed income or equities based on
our market views
• Our market views are determined by three broad inputs: valuations, macroeconomic factors and market sentiment
• We use both quantitative models and qualitative analysis in our research
• At this point in time, we believe that investors should have a neutral asset mix—
not be overweight either fixed income or equities—as conflicting forces are now
at play in the markets
• Bonds are also expensive, but we believe interest rates will rise at some point; the
question is whether rates will rise faster than what is already priced into the curve
and bring bond prices down more than expected. On the macro front, the picture
is mixed from a bond perspective, but sentiment is supportive and bonds are still
in a positive price trend
“We believe that
investors should
have a neutral asset
mix—as conflicting
forces are now at
play in the markets.”
– Alain Bergeron
The content of this summary (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer
to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.
This summary includes forward-looking statements, which reflect our current expectations or forecasts of future events. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions
which could cause actual results to differ materially herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors in North America and internationally, interest and
foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, chan ges in tax laws, unexpected judicial or regulatory proceedings or catastrophic
events. The foregoing list of important risks, uncertainties and assumptions is not exhaustive. Please consider these and other factors carefully and do not place undue reliance on forward looking statements. The forwardlooking statements contained in this summary are current only as of July 24, 2014. There should be no expectation that such information will in all circumstances be updated,
supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual
funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds sponsored by Mackenzie Financial Corporation are only
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To help get these insights working for you, talk to your advisor about the Mackenzie suite of balanced funds.