Mutual Fund Guided Portfolios
Six guided portfolios are available and are designed to be core investment strategies. Portfolios are diversified by investment style, geography, asset allocation, market capitalization and fund manager.
Sifting through the vast number of available Canadian mutual funds in order to identify investment-worthy options can be a daunting task. Based on Modern Portfolio Theory, and supported by the ScotiaMcLeod Mutual Fund Research process, the Guided Portfolios were created to represent efficient combinations of some of Canada's top mutual funds, providing an easy, professionally constructed and maintained approach to investing.
Selecting Funds
There are two key underpinnings to our philosophy on selecting mutual funds.
First, when recommending a mutual fund we take the viewpoint that we are hiring a money manager to do a specific job within a diversified portfolio, for the long term. Short-term performance variations are not a key component in our analysis.
Second, experience and empirical research have shown that past performance, while useful and interesting in analyzing mutual funds and their managers, is by itself not generally a reliable indicator of future performance. While we thoroughly analyze funds statistically, we believe we need to know a great deal more in order to give those numbers any context or meaning. As a result, we attempt to gain a thorough understanding of the portfolio management process, the investment style and discipline, the mandate of the fund, and the risks inherent in implementing the fund's strategy.
Close attention is paid to how funds interrelate when combined into portfolios. Managers with differing investment styles are offset against each other in order to reduce volatility and to enhance expected return for core asset classes in the Portfolios. No attempt was made to benefit from strategic style or sector bets. Rather, the Portfolios are as relatively style neutral and sector diverse as possible to avoid the uncertain return patterns and extra volatility associated with such decisions.
Monitoring Guided Portfolios
The Mutual Fund Guided Portfolios benefit from the same research and due diligence that is the foundation of the ScotiaMcLeod Mutual Fund Recommended List. ScotiaMcLeod Fund Analysts continually monitor and evaluate the investment-worthiness and performance of each of the underlying mutual funds in the Portfolios. Areas of focus include, but are not limited to, factors such as manager and investment team changes, consistency of investment style and fund mandate, portfolio concentration and investment costs. Additionally, the performance and characteristics for each Portfolio will be monitored with the goal of maintaining risk within reasonable parameters.
The six Guided Portfolios range from the most conservative allocation at 80% fixed income funds combined with 20% equity funds to the most aggressive consisting of 100% equity funds. The Guided Portfolios are designed to be core investment strategies diversified by investment style, geography, asset allocation, market capitalization and fund manager
