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PORTFOLIO ALLOCATOR

The traditional portfolio in Canada is 60% equities and 40% bonds, but has over 86%* exposure to equity risk. Balanced, yes. Diversified? No.

We’ve developed a calculator** to show how adding authentic hedge solutions can enhance traditional portfolios by reducing volatility, minimizing loss, and increasing return. Move the slider to the right and then scroll down to see for yourself the difference authentic hedge can make.

 
  • Hedge
    %
     
  • Cash
    %
     
  • Bond
    %
     
  • Canadian Equity
    %
     
  • Foreign Equity
    %
     

Move the slider to the right to see the impact of increasing hedge allocation in a standard 60/40 portfolio.

0%

100%

Want to optimize your model portfolios? to reweight the starting portfolio and determine the optimal hedge allocation for each of your models.

 
 

Volatility

Initial portfolio bar value: 100%
vs
New value with hedge allocation: 100%
Difference: 0%

We use standard deviation to show how much portfolio performance varies on a yearly basis. The lower the volatility, the more comfortable the investment is to own (fewer swings up and down).

 
 

Max Drawdown

Initial portfolio bar value: 100%
vs
New value with hedge allocation: 100%
Difference: 0%

This measures the largest single drop (in %) from peak to trough of a portfolio. Smaller drawdowns mean more capital protection and greater growth potential over time.

 
 

Return

Initial portfolio bar value: 100%
vs
New value with hedge allocation: 100%
Difference: 0%

Here we’re measuring the average annualized return of the portfolio over the last twenty years: how well the portfolio performed, on average, every single year.

*Source: Picton Mahoney Asset Management. Risk is defined as the standard deviation of the traditional 60/40 portfolio to the S&P/TSX (which represents equity risk) where 86% of the volatility is attributable to the equity allocation. 60/40 portfolio is based on 40% Canadian equities (S&P/TSX TRI); 20% global equities (MSCI World (ex Canada) Gross Total Return CAD); 25% Gov’t bonds (BofA Merrill Global Government Index); 10% corporate bonds (BofA Merrill Lynch Global Corporate Index); and 5% cash (3-month Government of Canada Treasury Bill).

**The Hedge Allocator is provided for information purposes to show the hypothetical impact of increasing the weighting of equity hedge funds to an investment portfolio with any of the following components: Canadian Equities, Bonds, Foreign Equities, Cash, Hedge Funds. This information is provided as a general source of information and should not be considered personal investment advice or an offer or solicitation to buy or sell securities. Performance and Performance Analysis data covers the period from July 31, 1992 to March 31, 2017. Past performance is not a guarantee of future performance. Hedge Funds are represented by an equally weighted blend of the HFRI Equity Hedge (Total) Index (CAD) and the HFRI Equity Market Neutral Index (USD). Canadian Equities are represented by the S&P/TSX Composite Total Return Index (CAD). Bonds are represented by the Bank of America Merrill Lynch Canada Broad Market Index (CAD). Foreign Equities are represented by the MSCI World (ex-Canada) Gross Total Return Index (CAD). Cash is represented by the 3-month Government of Canada Treasury Bill. HFRI Equity Market Neutral Index returns are in USD to reflect the currency-neutral composition of market neutral strategies. All other Index returns are in CAD. The allocations to Canadian Equities, Bonds, Foreign Equities and Cash are adjusted pro-rata for increases and decreases to the Hedge Fund allocation. Volatility, Maximum Drawdown and Return are calculated using monthly return data. Returns are annualized since inception.