6) Weekly investment meetings
Collaboration and efficiency are central to everything we do. Within our investment management process, we divide the areas of interest among our four-person investment team to allow us to cover more ground and better share ideas. Danielle and Brent are both CFA charterholders, while Anita has completed the three CFA exams and is planning to apply for her full charter in 2018 and Oskar is a MBA. We set aside time every week to share insights from the past week as well as to discuss client-specific investment changes or cash flows that may be pending.
7) Annual and ad-hoc rebalancing
Many studies have tried to quantify the value of security rebalancing and the optimal frequency to do it. In our view, annual rebalancing makes the most sense as it balances three important factors:
It allows your winners to run
It reduces unnecessary tax implications for non-registered accounts
It provides a systematic way to capture profits and maintain the desired asset allocation and risk profile over time
In addition to our formalized annual rebalancing, we will periodically rebalance portfolios as part of a client’s cash flow needs or changes in overall portfolio and client objectives.
8) Annual tax loss selling
Tax-loss selling is a strategy that involves selling securities at a loss to offset capital gains and the associated taxes realized by other investments. Each year, we review every client's non-registered accounts for opportunities to harvest losses. This process takes into consideration various factors, including gains realized in both current and prior years (net losses can be carried back up to 3 years), gains realized in our portfolio or elsewhere, and charitable intents or donations made.
9) Defense: pre-defined incremental plan to improve portfolio quality
We are constantly on the lookout for signs that an economic recession and therefore an equity Bear market could be near. We focus on bear markets as opposed to corrections. Corrections tend to be smaller in duration and magnitude. This makes them more difficult to trade around and our “Low Vol” philosophy (step #2) can protect portfolios in such an event. So if we believe we are approaching a Bear market, we follow our 5 step process to protect clients. This incremental process has been developed by drawing heavily on our experiences in past Bear markets and vetted by RBC’s investment strategist:
Pay off debt
Raise cash for any draws
Increase fixed income quality
Reduce niche growth positions
Shift equity to bonds
10) Constant review and monitoring
Client portfolios are reviewed and monitored on two levels. Firstly, our team is able to regularly review the portfolio positions and implementation strategy as well as connect with clients to see if individual circumstances or investment objectives have changed. This frequent review is possible as we have a high number of investment professionals relative to the number of families we work with. Secondly, RBC independently does a compliance overview on an ongoing basis to ensure portfolios are within client’s individual IPS guidelines.