What is being relevant?
Being relevant means you are closely connected to the matter at hand. Many investors have goals that they want to achieve in their lives. They may be dreams today but the goal is to become reality in the future. If you had the chance to make a bigger impact on your family, community or passion in life would paying closer attention to how your money is working for you be worth it. Most investors work hard to save enough money for a home, education, a vacation property, retirement or to leave a legacy that will outlive them. Whatever the goal, your money should be working equally as hard for you as you worked to save it.
Within investing that means not merely being invested in what everyone else is doing, but being closely connected to what is going within the market, having the experience and expertise to deal with it and ultimately delivering an outcome that is in excess of the average. If your only goal is to achieve the return of the market the best way to access it is through the lowest priced option available. If you want to achieve more of your goals a good approach is growing your wealth faster than the average.
Why Relevance Wealth Management
At Relevance Wealth Management, our mission is to help client’s achieve their wealth management goals through striving to grow their investments at an above average, above benchmark rate of return without taking on undue risk. To achieve this we appreciate that we can’t follow the same investment strategies as the crowd. Similar to many of the world’s largest pools of capital, we understand the need to incorporate alternative strategies and take advantage of complexity, illiquidity and size. Relevance Wealth focuses on sourcing global manager expertise in areas where investors can succeed from beneficial diversification and accretive performance.
Doing what everyone else is doing will not deliver differentitated results
For much of the last 4 to 5 decades investors could count on a globally diversified equity and bond portfolio to generate solid absolute returns. That will likely be negatively impacted by the fact that by the end of 2020 over $18T of global bonds were generating negative yields. According to Bloomberg “Twenty-seven percent of all investment-grade securities now bear sub-zero yields, meaning that investors who acquire the debt and hold it to maturity are guaranteed to make a loss.” Investors have benefited from 40 years of almost uninterrupted falling rates that have been accretive to fixed income and portfolio returns. As of the close of December 2020, the Canadian and Global fixed income mutual fund categories returned 3.5% and 3.4% annualized before taxes for the preceding 3 years. Given current yields as of the beginning of 2021 are lower than they have been at any time in the past the expectations for future fixed income and portfolio returns have been reduced. How can you avoid the same thing happening to your portfolio? What if you could grow your investments at 9% over the next 20 years instead of 6% which was the category average for Global Balanced funds over the last 10 years for the period ending December 2002? On a $500,000 portfolio a 3% difference in return would net an additional $1.2M in wealth. Could that change your ability to achieve more of your goals?
Accessing alternatives to gain return and control risk
When the Canadian Pension Plan Investment Board (CPPIB) began its investing program in 1999 their investments were 100% Canadian Bonds. Today the bond exposure is 19% and only 16% of the total is invested in Canada. Global and alternative investments such as private debt, alternative credit, private equity, infrastructure and real estate have made up the difference. Today, half of all CPPIB investments are categorized as alternatives. Other large pension plans such as Yale University’s Endowment fund have as much as 70% allocated to alternatives. Despite this the average Canadian investor has less than a 2% allocation to alternative investments.
What pension plans have discovered is that by being long term investors and not being constrained by requiring daily liquidity in all the assets they own they can achieve better risk adjusted returns. We have all heard the advice, “invest for the long term” but individual investors are often advised to only invest in stocks and bonds they can sell immediately. If your goals will be achieved over the next 20 years and you have the potential to achieve better results through a pension approach, would that be relevant to you?
Access to alternatives for individuals and many pension plans has been slow due to the speed of regulatory reform, lack of available product, and lack of domestic manager expertise. This has created a growing divide between how large institutions and investors allocate capital. Relevance Wealth Management is bringing broader access to quality alternative managers by partnering with global managers that are highly credentialed, experienced and specialized. For investors with the financial flexibility to maintain their investment strategy beyond a day, week or month we would like to demonstrate how our managers enhance risk and return beyond tradition investment options alone.