Dynamic Funds Conference - Fund Manager Comments  


Myles Zyblock, Chief Investment Strategist – this is a time of historically low yields, and the uncharted territory of negative interest rates -- estimates that 34% of entire stock of secondary bonds are priced for a negative yield to maturity.  In some places, people are being paid to hold a mortgage!  The valuation for a typical global stock stands in the 90th percentile of it historic range – a challenging starting point to generate rewarding passive long-term returns.

Why would anyone want to own ultra-low-yielding bonds? Answer: Necessity and regulatory requirements for banks, insurance companies, benchmarked investors, ETFs; Speculation – to express views on currency, yield curve, economic surprises; Post Traumatic Stress Disorder – a cognitive imprint lingering from prior bear markets. His approach: set realistic return expectations – returns may be sub-par for passive balanced portfolios; given overvaluation embedded in many benchmark indices, don’t be the benchmark – consider flexible, active management which is selective and not fixed to allocations or geography.

Noah Blackstein – a global ‘growth’ manager; has had more positive and fewer negative return periods for rolling 12-month, 36-month, 60-month and 120-month returns than the MSCI or Average Global Equity fund; ignores headline news; from primary research universe of 5,000 companies, narrows down to a fundamental selection of 20-30 stocks; ‘Active Share’ is 94.0% and 97.3% on Power American Growth and Power Global Growth respectively

Oscar Belaiche – heads the equity income team; what’s happening in the income space? A lot of market volatility – fear and greed; US and Canada equity indices hitting resistance; minimal to negative return on bonds; even conservative balanced funds will have trouble generating returns because of low to negative bond yield; using the whole ‘tool box’ --  geographical diversity; put/call options; alternative strategies such as private debt/equity, closed-end funds and mortgages; hedging strategies; invests in income sectors such as real estate, energy, infrastructure; Strategic Yield has outperformed the index since inception

Cecilia Mo – a ‘value manager’, likes to have a margin of safety when buying.  But these are confusing markets, macro-driven instead of reflecting specific company value; central banks remain accommodative and there really is no alternative to equity, but we are 7 years into US economic expansion, there is a general lack of earnings growth, and valuations are not compelling.  Sees an aging demographic, global indebtedness and increasing income inequality slowing earnings.  US consumer behaviour has changed –focussed on ‘experiences’ rather than ‘stuff’; preference for saving over spending; much less ‘wealth effect’ from housing appreciation.  Current strategy is to hold some cash and buy good companies on dips, defensive and dividend-focussed, looking in the sweet spots of US consumers, healthcare and US domestic-oriented industrials.

Christine Horoyski, Aurion Capital – an institutional approach to fixed income investing. Dynamic Aurion Total Return Bond Fund is unconstrained as to geography and issuer.  Includes Emerging Markets, Foreign and Domestic, High Yield, Inflation-Linked Bonds.  Tactical and actively managed. Strong performance in both rising and falling yield environments.  Total Return Bond fund has been 1st quartile over last 5 years to April 30th. 

David Fingold – today’s media themes create a lot of market confusion – fees, tracking error, ETFs, robo-advisors, asset allocation.  Where is the market going? What does it matter?  Macro factors are having a declining impact on equity returns.  This is positive for active managers who can selectively pick undervalued, quality companies to hold.  Bullish.  Secular bull market cycles last 20-42 years; we are 7 years into the current one.  Quotes Peter Lynch: “Far more money has been lost by investors trying to anticipate corrections, than has been lost in corrections themselves.” 

Looks for opportunities such as big rallies in downtrends. Does not favour the energy sector.  Invests in quality management, industry leaders, sustainable competitive advantage, high returns on invested capital, adequate capital, optionality. Global Asset Allocation Fund focuses on capital preservation. 1st quartile over 1, 2, 3 and 5-yr periods.  Tactical. Active share as of March 31st/16 is 95.4%   Global Dividend Fund is a conservative approach to global equity markets. Invests almost exclusively in dividend-paying companies or those expected to initiate a dividend. 1st quartile of 1, 3, 10-yr periods with less volatility than benchmark.  Active share as of March 31/16 is 94.9%.  Sector allocation is significantly different than the index. Global Discovery Fund is flexible, go-anywhere, all-cap mandate. Active share as of March 31/16 is 98.2%. 



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