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Wealth Management: Customized Portfolios Investing with ETFs Diversification Tax Efficiency Performance Low Costs/No Commissions The J.C. Hood Difference Our Fees |
Customized Portfolios Our clients assets are not pooled they are individually managed. Most clients enquiring about our firm, usually have a portfolio of mutual funds or one of the 'multi-manager wrap accounts'. Quite apart from the high cost of these plans, they frequently have a similar asset mix irrespective of the clients age, risk tolerance or objectives. For individuals approaching retirement age, their priorities are tax advantaged income and capital preservation. I have often found that clients portfolio are overweighted in Canadian and global markets, but have ignored U S equities. For the past several years our portfolios have been overweight US equities. For individuals wanting a growth portfolio, these international assets or industry sectors can be added to their portfolio without added currency risk and at much lower costs by using currency hedged ETF's. Investing with ETFs (exchange traded funds) We build our clients' portfolios almost exclusively with ETFs, which are based upon a specific index. For example, the 60 largest companies on the Toronto Stock Exchange are represented in the TSX 60, whose symbol is XIU. The XIU includes all the major financial companies for example:, the Canadian banks, Manulife and Sun Life, and similarly, the largest companies among other fundamental Canadian market sectors, mining, telecommunications, oil and gas etc. Diversification In the markets there are two fundamental risks, the risk of an individual stock and overall market risk. By employing ETFs, we eliminate the risk of owning an individual stock. At the same time, we are reducing risk further because of the extraordinary diversification provided by ETFs. Tax Efficiency Because the portfolio turnover rate in ETFs is far less than that of either mutual funds or wraps which change managers and stocks frequently, there are fewer taxable events triggering capital gains. In addition, the firm uses a number of strategies to enhance after tax yield in both your registered and non-registered accounts. |
