The Investment Policy Statement is an attempt to express your personal investment objectives in a document that will guide the content of your portfolio. It provides the framework for managing your investment portfolio including making decisions, reporting on progress and reviewing your objectives in a timely and regular manner.
Investor profile. We will determine what kind of investor you are, for example, an investor seeking income and preservation of capital.
Income needs. We determine how much pre-tax income per month will be required to be withdrawn from the income earned.
Tolerance for fluctuations. We determine your tolerance for declines in order to preserve capital, for example one to two quarters may be all that is allowed before making adjustments.
Time horizon. We document the length of time the funds are expected.
Liquidity. You can indicate that a certain amount of the portfolio should be held in cash or cash equivalents for specific expenditures that will not be made from normal income withdrawals.
Asset mix guidelines. Specific guidelines, in keeping with current market and economic conditions, determine how much of the portfolio will be invested in money market securities, longer dated fixed income securities, preferred shares, and equities.
Asset allocation. The asset allocation of income and growth investments will be determined through verbal conversations and the RBC Dominion Securities Asset Allocation Guidelines. This will help us determine investment risk and investment objective attitudes.
Investment products. The portfolio will be invested in a combination of cash, equities and fixed-income Instruments, depending on your objectives and risk tolerance.
Quality guidelines. All individual debt securities will be rated “BBB” (R-1 for money market securities) or better by a recognized Rating Agency. Preferred securities will be rated P3 or better, and no equity investments will be made in any company with a market capitalization of less than $100 Million unless agreed upon through verbal discussions.
Diversification guidelines. Generally, the cumulative investment of equity and preferred shares in any one company or any mutual fund investment will not exceed 10% of the portfolio. The cumulative investment of preferred and common shares in any one industry sector or group will not exceed the greater of 10% or 1.5 times the percentage weighting assigned to that group by the TSE 300 Composite Index. The total of all investments falling outside the above quality and diversification constraints will not exceed 5% of the portfolio. From time to time the portfolio may hold trading positions in anticipation of news or events or other short to medium term opportunities. No more than 25% of the portfolio will be exposed to trading positions at any one time.
Taxation. For non-registered accounts tax minimization will be a key strategy.
Planning horizon. The time horizon for making investment decisions and performance assessments will be a three- to five-year period. Results will be measured quarterly and reported semi-annually through our rate of return analysis.
Reporting and review. We will provide a monthly statement for each of your accounts detailing all transactions in the account; a comprehensive portfolio review including performance evaluation and a review of the Investment Policy Statement to ensure it continues to meet your requirements. Semi-annual Rate of Return analysis, Projected Monthly Income Statement, Market Gain/Loss Statement and Capital Gains/Loss Statements may also be provided.
Decision making. Few programs are ever final. Conditions change, new goals emerge and old needs become less important. Certain investment vehicles become inappropriate and must be replaced. Portfolio changes will be made within the context of your objectives, risk tolerance and the investment environment.
