Investment Philosophy

Many Canadians have invested the same way for decades. This includes a portfolio primarily comprised of stocks and bonds. The typical Canadian balanced investor has an asset mix of approximately 60% equities/stocks and 40% fixed income/bonds. This is known as the traditional 60/40 portfolio.

In contrast, sophisticated investors such as pension plans, endowments, and high net worth individuals have adopted a new approach to investing. This approach comprises four asset classes; traditional Equities and Fixed Income, Alternative Assets and Alternative Strategies. We refer to this as the Four Asset Class Strategy. Our goal is to bring this new approach of investing to everyday Canadians.

WHAT ARE ALTERNATIVE ASSETS AND ALTERNATIVE STRATEGIES?

Alternative Assets are investments in things such as real estate, infrastructure and other hard tangible assets. The value of these assets isn’t necessarily impacted by the global stock market. This is what investors refer to as having low correlation to the market, which can reduce a portfolio’s volatility. These assets can provide stable cash flow, and/or capital appreciation over the long term.

Alternative Strategies are skill-based trading techniques that use financial instruments such as stocks, bonds, currencies and commodities. These skill-based platforms look for inefficiencies in the markets and attempt to exploit them in both directions. This is often referred to as Absolute Return strategies. The idea is that these strategies can generate positive returns in various market environments. Their performance is also not directly related to global stock and bond markets and therefore further diversifies investor portfolios and gives them access to returns that are not available with the traditional 60/40 approach.

It is important to note that the Four Asset Class Strategy is also very global in nature. Many Canadians have geographically concentrated portfolios with a very heavy bias to Canada. This can lead to dramatic underperformance at times and perhaps over the long run due to having too much exposure to any one country or region. In order to deliver a high-quality global portfolio, it is important to have partnerships with other investment firms that have a global perspective. These partnerships allow NorthPoint Investment Partners to build a truly global portfolio.