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Redefining Active Management

Redefining Active Management. Yoonjai Shin, CFA Director, CI Investment Consulting. Agenda. CI Investment Consulting team Redefining active management Market outlook. CI Investment Consulting Team. Alfred Lam, CFA VP & Portfolio Manager Investment strategy / Asset allocations

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Redefining Active Management

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  1. Redefining Active Management Yoonjai Shin, CFA Director, CI Investment Consulting

  2. Agenda • CI Investment Consulting team • Redefining active management • Market outlook

  3. CI Investment Consulting Team Alfred Lam, CFA VP & Portfolio Manager Investment strategy / Asset allocations Fund selection/ Currency strategy Communications Lewis Harkes, CFA Senior Analyst Fund/manager analysis Performance reporting Yoonjai Shin, CFA Director Fund/manager analysis Asset allocations Currency strategy Fund selection Project management Andrew Ashworth Analyst Fund/manager analysis Cash flow management Performance reporting Marchello Holditch Senior Analyst Fund/manager analysis

  4. What do we manage? $20 billion in assets under management

  5. Industry recognition Best Fund of Funds Award -2011 Best Fund of Funds Award -2012 Best Global Fixed Income Balanced Award -2012 Best Global Fixed Income Balanced Award -2013

  6. The new normal • Bond return expectation is very low • Equity returns are more attractive but have high volatility Investors can either take more risks or demand from their portfolio manager to work harder

  7. Redefining Active Management Manage/ Reduce Optimize Minimize Total return = Asset mix + Alpha + Market Beta + Currency – Tax – Fees Maximize Manage Reduce

  8. Access to managers under one roof

  9. Solution for every investor Expected Return % . . PE expansion . . . Gov’t Bonds GIC Volatility 100i 100e 40i60e For illustration purposes only; there is no guarantee on results

  10. Strong performance 2013*20122011 PSS 40i60e 9.2 9.2 -2.9 PS Balanced 8.3 8.1 -2.8 Quotential Balanced Growth Portfolio 5.4 6.4 -4.5 Fidelity Balanced Portfolio 5.0 8.1 -2.8 Dynamic Edge Balanced Portfolio 5.0 6.0 -3.7 AGF Elements Balanced Portfolio 4.6 6.8 -3.0 40% DEX, 60% TSX 1.9 5.2 -1.4 *May 31, 2013

  11. Why are we out-performing? • Superior income allocation • Overweight US equity • Currency hedges did not cost us even though CAD has depreciated in general • Strong performance from Cambridge and QV (PSS only)

  12. Price-Earnings Multiples Based on 12 Month Forward Operating Earnings 26 26 TSX S&P 500 24 24 22 22 20 20 18 18 16 16 14 14 12 12 10 10 8 8 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Bottom Up Earnings Based on CPMS (TSE) and IBES (S&P) Consensus Outlook: US vs. Canada Overweight US Source: TD Securities

  13. Outlook: US vs. Canada GDP growth forecast 20132014 US 2.0% 3.2% Canada 1.6% 2.4% Source: CIBC

  14. Outlook: continued monetary easing Source: Rudebusch (FRBSF Economic Letter, 2010), Haver Analytics, Federal Reserve, CIBC

  15. Outlook: volatile bond markets Volatility in bond markets leading to tactical opportunities Government of Canada benchmark bond yields - 10 year GRAPH PERIOD: 28 May 2012 - 28 May 2013 Source: Bank of Canada

  16. Outlook: Canadian dollar Canadian dollar is 17% overvalued based on Purchasing Power Parity Source: Bloomberg

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