Introduction to Managed Asset Programs

I talk a lot about Taking it to the Next Level. That's because I believe that a large number of Canadians are taking the same approach to investing that they did 10 or more years ago and they're due for a change.

Beginning in the late-eighties, many people began listening to the pundits and started investing regularly in their RRSPs. They diligently made their contribution and used the best vehicle available for them at the time - mutual funds.

But if you're an established investor - if you built a solid base by investing regularly over the past 10 or more years, you may need to revisit your approach and take your portfolio to the next level.

Mutual Funds come with a number of advantages. They provide professional money management, diversification and convenience by pooling your money with other "small" investors. But perhaps you're not so small anymore. If your portfolio is worth $100,000 or more, there are other vehicles that carry all the benefits of mutual funds and a few more.

One such vehicle is a Managed Asset Program, sometimes known as a Wrap Account. Rather than selecting mutual funds individually, managed asset programs use a process to build your entire portfolio.

It begins with an assessment of your goals and risk tolerance. This allows me to determine how to allocate your assets among different investment classes such as bonds, Canadian, US and International stocks.

Next the assets are placed with portfolio managers who are specialists in each of these areas. The pool of managers is overlooked by a third party consultant with expertise in manager evaluation and portfolio construction. These consultants are not just selecting the best money managers, they're using sophisticated processes and models to determine how various managers will work together within your portfolio to give you the desired results. It's the same process pension plans use and you can access it through a Managed Asset Program.

Some other benefits include:
Institutional Managers: the portfolio managers available through these programs are a fairly exclusive group. Among the world's best, not anyone can access them in the retail market.

Sophisticated Portfolio Construction: The third party consultants are global firms who help with the management of large portions of the world's institutional assets. The depth of their research and the complexity of their models are outstanding.

Third Party Process and Oversight: A universe of over 6000 portfolio managers is rigorously analyzed, tested and reduced to a "buy" list of about 100 firms that manage the specialized pools from which your portfolio is built.

"All-In" fee: Unlike mutual funds which bundle fees into the calculation of fund values and performance, some managed asset programs charge an all-inclusive fee outside the investments. There are no up-front commissions. It allows you to see exactly what you're paying and assess the value of what you're paying for. You may also be able to deduct the fee as a carrying charge on your tax return.

Comprehensive Performance Reporting: You receive a review of the performance of your portfolio as a whole as well as a review of its individual parts.

For more information about Managed Asset programs and how they can benefit you, call or email me.