Ashley Redmond: Welcome back to Stock Talk, and for this month’s edition, we're going to discuss more ideas for equity investors. We're actually going to highlight a balanced investment strategy that can help bring performance, as well as help mitigate risk within your portfolio.
Welcome back Melissa.
Melissa Kahnert: Thanks, Ashley.
Redmond: I feel like every time we film one of these -- it rains outside.
Kahnert: It definitely does. I don't if that's good luck, but we'll go with it for today.
Redmond: All right. So, let's start by talking about a balanced approach towards your portfolio.
Kahnert: Okay. So, as an investor considering a balanced approach is pretty important when it comes to making sure that you're realizing your investment goals. So, it all starts to assess what kinds of investment products are available to you? And what are right for you? How you're diversifying -- and not just geographically for instance -- but your own individual assets; how are you capturing parts of the market most valuable to you?
There are lots of different strategies that are available to investors from high yield stocks to undervalued stocks to financial companies, mutual funds and then we have the old conversations at the dinner table with your friends where they might have a few hot stocks to recommend to you as well. So -- being a prudent investor -- you want to almost encompass all of the options available to you and then certainly be able to filter through and pick the ones that are most appropriate for your portfolio.
Redmond: Great. And with a balanced strategy it seems like it’s just what it sounds like, balanced on each side.
Kahnert: Exactly, I mean theoretically we're looking for balance. So, we don't want to have too much weight in either side of boat. We want to be able to just have everything sitting nice and safely in the middle.
Redmond: Okay. So, I know today you brought us three different investment strategies?
Kahnert: Yes.
Redmond: So, why don't you tell us about those?
Kahnert: Okay. The CPMS Triple 5 portfolio is what we're going to speak about today. And this portfolio consists of three CPMS investment strategies. We have an Income Strategy, a predictable Growth Strategy, and a Momentum Strategy in that portfolio. Even though we have different strategies, we'll screen our entire Canadian universe, pick the top 5 picks in each one and then combine them all in one pooled approach of 15 stocks.
Redmond: Okay. And anything else you want to add about the three strategies in the screen that you used?
Kahnert: Well, if you think about what strategies we're using, we obviously are encompassing different screens in each. So, our Income Strategy, we'll be looking for high yield dividend stocks. Our Growth stocks are looking for reasonable price to earnings ratios and profitability, basically less volatile earnings and momentum favors high earnings and price momentum companies.
Redmond: What kinds of companies come up in these screens?
Kahnert: Well, there are currently 15 companies in this screen that we can go over in the chart that will come up in a couple of seconds today. We separated each of these companies by strategy, and let’s start by going off the names on the growth strategy.
Our first company is Rio Alto Mining, followed by Home Capital Group, Canadian Western Bank, CGI Group, and the Bank of Nova Scotia. In the Income Strategy, we have Chorus Aviation, Parkland Fuel, Superior Plus, CML Healthcare, Capstone Infrastructure and rounding out on the momentum our top five are Pulse Seismic Inc., Sierra Wireless, Gibson Energy, West Fraser Timber, Intertape Polymer Group.
Beyond the companies we can mention that since inception in 1985, the CPMS Triple 5 portfolio has posted annualized returns of 16.7%, more than double the 8% annualized return of the S&P/TSX Total Return Index. For the year-to-date and as of yesterday, the Triple 5 is up 16% this year versus a 6.7% gain on the S&P/TSX Total Return Index.
Redmond: So, it looks like the portfolio has really been rewarded for its balanced approach.
Kahnert: Yes, definitely and since it hasn't committed to adjusted yields, or growth or momentum type strategies, it’s put everything together in a pooled approach and that has contributed too much of its success.
Redmond: Good. And what’s the result?
Kahnert: Well for the investor, it gives them an opportunity to capture on market opportunities from different companies that are following different investment strategies, reacting differently in different market cycles and just overall timing.
Redmond: Great, thanks so much Melissa.
Kahnert: It was great to be here.
Redmond:Just a reminder Melissa is not providing financial advice. We encourage you to speak with the financial advisor or planner before selecting stocks. CPMS is only available to institutional clients and investment advisors, however, you can find free stock quotes at the top of Morningstar.ca.
