Our Statement of Investment Philosophy

The following are the fundamentals of investing which we believe and observe, and form the basis for our investment advice to our clients:

Financial Planning And Goals

  • Generally, the following order of priorities should be followed:
    1. Pay off all credit card and other high interest debt
    2. Maximize annual RRSP contributions
    3. Save for children's education (RESPs)
    4. Contribute three months' income to a rainy day fund for emergencies (likely in a TFSA)
    5. Pay down the mortgage or car loan
    6. Maximize your contributions to a TFSA
    7. Begin a non-registered savings plan (or lastly, consider borrowing to invest)
  • After helping set goals, developing, implementing and sticking with a financial plan is a key service we provide. A client experience is outlined in our Managed Money Reporter newsletter (formerly the Mutual Fund Reporter newsletter), Issue #203. It points out that while we cannot control the markets, we can help clients by identifying good professional investment managers, and then helping the clients stick to their plan
  • We use a sophisticated planning program called "Naviplan" and have documented plans for several hundred clients

Capitalism Works

  • Equities (stock) ownership presents the greatest long-term growth opportunities and ability to beat inflation (periods of five years or more)
  • It is fundamentally logical that owning a company (e.g. a bank) entitles you to higher returns than the company pays to its clients. (e.g. bank shareholders get paid more than the bank's GIC holders)
  • International equities generally outperform Canadian investments (a market somewhere in the world will outperform Canada this year) but adds currency risk in the short term
  • Due to individual company risk however, buying one or two individual stocks should only be done with money you are willing to risk - holdings of fewer than 10 stocks are not a diversified investment portfolio
  • Investing equal amounts over a regular period of time (dollar cost averaging) is a sound strategy as it helps to "buy low" when the markets go on sale

Asset Allocation And Diversification

  • Returns generally increase with risk - the key is to get the best rate of return for a given (acceptable) level of risk
  • Diversification of investments lowers risk
  • Overall risk tolerance decreases with age (the very best rule of thumb is that 100 minus your age equals the percentage recommended for equity investments), with your age as a percentage in guaranteed investments (bonds)
  • Investments of under two years should only be in low risk treasury bills, GICs, term deposits or bonds
  • We will always err on the side of being too conservative rather than too risky - we tend to recommend higher weightings in bonds for risk adverse investors
  • Bond investments are best made by directly purchasing bonds or stripped bonds, as there is no need to diversify or pay an annual management fee to simply buy and hold bonds (the exception is in monthly contribution plans where bond funds can handle small periodic investments)
  • Bond maturities should be staggered (laddered) to match the time when the funds will be required to minimize risk - we can provide a detailed graph of your bond "ladder"
  • We utilize a program called "Bestmix" to asses a client's risk tolerance and provide data on optimal historical risk and return ratios

Professional Money Managers

  • We use a disciplined process to select investment managers (.pdf 30k).
  • Mutual funds present a convenient method of purchasing equity investments with good diversification and professional managers, they are the original managed account programs
  • We recommend mutual funds based on an analysis of:
    1. Historical performance vs. risk
    2. Investment manager history and personal interviews with the managers
    3. Market positioning and outlook
    4. Management fees
    5. Membership in a larger fund family
    6. Minimizing duplication with existing funds in your portfolio
    7. Tax efficiency and low turnover of portfolios
  • Enhancing returns through market timing (switching investments) is virtually impossible for individuals - look at asset allocation (balanced funds) to have a professional pursue this rebalancing without transaction fees
  • Individual manager selection is important in the short term, but not as critical as simply holding on to the investments in the long term
  • Returns need to be measured relative to other similar investments (equity funds against the TSX) and against inflation
  • Technology now allows us to monitor fund managers more closely, and continues to provide added value for our clients

Active Vs. Passive Investing

  • Professional investment managers will outperform the majority of individuals, and generally outperform their benchmark index on a risk adjusted basis. Even after fees, most Canadian equity money mangers have outperformed their benchmarks
  • Index funds and ETFs may have a place in a portfolio, but risk and convenience should be examined.
  • Active investing means that your manager is trying to be better than average, even though by definition half will always be below average. Indexing means striving to be average. We find that to be a difficult proposition to accept.

Mutual Fund Fees

  • Lower Management Expense Ratios (MERs) do not necessarily mean higher returns especially on Canadian equity funds - in life you often get what you pay for. But as stated above, on bond funds there is often no need to pay for management.
  • There are often more top performing load funds than no-load funds (the best managers tend to be attracted to the big name funds - with a few exceptions)
  • Rear end load funds were preferable to paying front end loads (except in a few cases where rear end management fees were higher). For over a decade, for our valued larger clients, we have been investing in "load funds" with no front end or rear end loads. We still earn a service/trailer fee from the fund company which compensates us for our services to you.
  • Investing in no load funds (and load funds with no loads) allows us to be fee based advisors. We only earn more on your account when your funds go up, we prefer not to be motivated by individual transactions
  • While we generally don't like the management fees on bond funds, there are some reasons to consider funds over direct bond ownership under certain circumstances, and AIC has consolidated those reasons into one document (see "Bonds vs. bond funds").

Tax Efficiency

  • RSP accounts should focus on stripped bonds and equities up to the client's tolerance for risk
  • Non RSP accounts will focus on stocks for capital gains and the dividend tax credit for better after tax returns
  • Very few clients require sophisticated strategies such as limited partnerships and leverage, but where appropriate, we are completely able to provide such services

Take Advantage of Us

  • You get what you pay for - we are not a discount broker so you can expect, and will receive, more from us. We are pleased to be used as a resource for all your financial questions
  • In many cases, (e.g. rear end load funds) our fees are actually the same as discounters, in the case of large (0%) front end load purchases, we may be even less expensive
  • Clients deserve to be protected from sensationalized media coverage, unproven "investments of the month" and poorly trained and inexperienced advisors
  • We will manage your account in the same way we manage our own and our families' accounts:  We are consistent in our philosophy
  • A well-informed investor is our best client so we provide regular newsletters, seminars and encourage you to use us as an information resource

History of the Managed Money Reporter

Back in 1982, John Zufelt began as an advisor at what was then McLeod Young Weir. After four successful years he began to realize that he could provide better investment advice and service to clients by turning over the day to day management of stock portfolios to professional investment managers who could watch the markets minute by minute, every day. In 1986, to monitor the performance of the mutual funds, a monthly computer program was written by Carl Spiess, a Systems Engineering co-op student, to rank all the funds in Canada.

Between John and Carl, the Mutual Fund Reporter was created. John was the sole editor from 1986 until 1990 when Carl became co-editor. With the growing interest in mutual funds in the 1990s and an increasing subscriber base to the Mutual Fund Reporter, John and Carl together become one of the largest advisory teams at ScotiaMcLeod. In January 2001, John transferred daily client contact responsibilities to Carl Spiess and The Spiess McGlade Team.

Since the Mutual Fund Reporter's inception, the number of mutual funds in Canada has grown, and so has interest in funds. Investment Funds Institute of Canada statistics show that, as of 2014, over $1 trillion had been invested in funds. However, the number of other investments available to our clients has also increased making The Spiess McGlade Team a one-stop shop for investment and financial planning advice. In January of 2008, the Mutual Fund Reporter became the Managed Money Reporter, reflecting the reality of our business and the full gamut of services we offer our clients. We will continue to research the best money managers and advise on the best investment alternatives for our clients for years to come.


Contact Us

T.  416.863.RRSP (7777)
F.  416.863.7479
E. carl.spiess@scotiawealth.com

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.