Are you on track in 2016? Are you tired of surprising risks and too much volatility?
Jeff Callaway - Jan 18, 2016
This investment solution is an innovative asset management platform from Canaccord Genuity’ s In-house investment counsel called Global Portfolio Solutions (GPS). The program has been running in the UK since January 2011 and has won numerous awards, including the Defaqto 5 Star Award, and the Gold Standard Award from the British Parliament for Discretionary Portfolio Management. The same template is being applied in Canada and was launched in late 2014.
This is a fundamental change from traditional portfolio management which focuses on returns first, and risk second. Our belief is that avoiding the worst days in financial markets is far more important than participating in the best days. . GPS utilizes a proprietary quantitative risk management framework (first and foremost, protect capital) combined with fundamental discretionary portfolio construction and management.
The unique risk management features of GPS uses our proprietary Market Stress Indicator (MSI), and Portfolio Optimizer to mitigate the difficulties in getting true diversification that has been the core of basic assumptions of the Modern Portfolio Theory over the past 50 years. The MSI measures the level of asset price correlation amongst 24 different global asset classes. In times of market “stress”, increased asset price correlation tends to precede negative and volatile markets. The MSI is able to perceive these changes in correlation in real-time, thereby acting as a warning. If the MSI notes increased asset price correlations, GPS portfolios will dynamically change course, re-weighting portfolios away from asset classes that are coming under pressure and/or becoming more volatile.
While the MSI measures market stress and correlation, the Portfolio Optimizer sets the maximum allowable amount of volatility for each portfolio, and helps to choose portfolio holdings. For example, GPS Portfolio 4 seeks to cap risk at a 6% annualized threshold (measured by standard deviation), and will maintain at least 30% exposure to cash and fixed income at all times. Portfolio 5, being one level higher in terms of risk/reward, will have a maximum annualized volatility of 9%, with 20% exposure to cash and fixed income at all times. This makes the portfolios easy to compare, and allows clients the ability to choose a portfolio that suits their risk tolerance.
Check out the GPS program at the following link if you are serious about getting on track and achieving your goals. There's no time like the present.