Episode 4

May 19, 2022


004 - Your investment portfolio – Do It Yourself or get a Pro involved?

Hosted by

Vincent Heys
004 - Your investment portfolio – Do It Yourself or get a Pro involved?
Financial Wellness with Vincent Heys
004 - Your investment portfolio – Do It Yourself or get a Pro involved?

May 19 2022 | 00:43:16


Show Notes

We’re simplifying the types of investment portfolios, and how you (or a fund manager) can best manage them to reach your financial goals. Jamie Brubacher and Vincent Heys unpack mutual funds, ETFs, stocks and managed funds.

Plus, they’ve got tips and guidance on managing your own investment portfolio or how to choose the right fund manager to do it for you.

Brought to you by wealthstack.ca

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Episode Transcript

Vincent Heys: [00:00:00] From wealthstack.ca Welcome to the financial wellness podcast series, where we discuss all kinds of financial principles, concepts, and products. Our aim is to make money matters. Simple again. Vincent Heys: Hey, do you know the difference between mutual funds, ETFs, stock portfolios, and manage portfolios in this podcast, we unpack these different types of concepts we discuss when it makes sense to purchase either of them, what to look out for when you make a decision and whether you are getting value for money, you might just find that your money can work harder for you. Vincent Heys: In this podcast. I interviewed Jamie Brubacher from Cidel asset management, to explain these concepts to us, enjoy the podcast. Hey, Jamie. Jamie Brubacher: Hey, Vincent. How are you? Vincent Heys: A great man. It's great to have you on the show here. Vincent Heys: Perfect. Thank you. Yeah, thank you for having me. Vincent Heys: So before we start, can you give us a quick intro of [00:01:00] yourself? Jamie Brubacher: Yeah, absolutely. So my name is Jamie Brubacher. I am a client portfolio manager at Cidel asset management. Um, I've worked at Cidel. For, uh, approaching about 10 years now. And, um, you know, from academic background, I'm a CFA charter holder, uh, CFA charter holder, I should say, you know, went to school here in Toronto, uh, and have, uh, my wife and kids just live north of the city. Jamie Brubacher: Um, Just a little quickly about Cidel Cidel is a privately owned asset management firm. We focus on essentially two parts of, of the investment space. We focus on the private wealth and the high net worth space within, within Canada. Um, and then as well, uh, within the institutional space. So, uh, taking care of, uh, various kind of institutional pension type mandates and, and strategies. Vincent Heys: Great. Thanks, Jamie. Okay. So let's, let's go straight into the discussion. Yeah. [00:02:00] Uh, let's say I'm a investor, I'm a client and I phone a friend. And in this case, I'm going to find you Jamie, uh, who is a financial advisor and a fund manager. And I want to invest some money. What are the things going on in your mind when you received my phone call and, and how do you know whether you can help me as a. Jamie Brubacher: Yeah, absolutely. So I think it's important for, for people to understand, you know, that idea of when, when you do knock on a financial adviser door, what are the things that they're looking at, or what are the things that they're considering, um, you know, first off, just to give you an idea of, of how you're going to get, uh, potentially treated, what type of products or strategies you're going to be offered? Jamie Brubacher: So the first one I think is, is, is generally size of portfolio and. Advisers look at this in two ways. One is how much money do you have that's investible today, which will kind of determine what type of strategies and approaches, uh, they're able to put you in. Um, and also there's also [00:03:00] the, the kind of flight path are you in that? Jamie Brubacher: Um, the accumulation phase. So you're saving money you're early or mid career and money is getting put away for retirement, or are you at the other end of that spectrum? You're divesting and money's going out the door and that gives you kind of different, a different profile. And I think that's the profile part is the second piece, which is, you know, from a risk standpoint, what's the goals. Jamie Brubacher: What are the objectives? How much volatility, if you think about risk in my mind, it's how much volatility can you take, um, or handle. And everyone's got to do. Amount, um, there's the emotional side of volatility and then there's the practical side of volatility and that's what they're going to essentially try and figure out. Jamie Brubacher: And then I would say the last piece is just from a regulatory perspective. So what, you know, what type of accounts do you have, uh, based on, on those types of accounts, what type of strategies or products are available? Um, for the family. [00:04:00] Vincent Heys: Okay. So, um, As an, as an investor, I would be wondering, uh, is the fund manager going to put myself into a, a mutual fund? Vincent Heys: Uh, I've heard about ETFs. I know that I can maybe might be running my own stock portfolio, but then I also know that there are third-party fund managers like yourself, you know, what are my B let's? Um, let's look at the differences between those four. Let's start with, um, uh, Jamie Brubacher: Sure. So a mutual fund, um, is a financial product that's professionally managed. Jamie Brubacher: So there is a professional money manager behind the mutual fund. That's deciding what gets purchased and what's gets sold. They're very highly regulated, which means they can go in anybody's portfolio and, and you can buy them in very, very small amounts. And the idea behind the mutual funds. We're going to set up [00:05:00] this safe audited structure. Jamie Brubacher: That's very transparent and can give every type of client bigger, small the confidence to make an investment. And that's how they're structured. The downside. I would say to all that regularly. They, they generally come, they're generally expensive, especially for smaller amounts. So fees can be kind of north of 2%, um, in the mutual fund space and, you know, depending on the client, uh, that might be something they, they can only access, but you know, it's, uh, it is one of those financial products. Jamie Brubacher: That's got a long track record. It's been around for a very long time. And as I said, anybody can buy it. You can buy it through your discount brokerage account. You can go into your local bank. And they'll sell you a mutual fund. Um, so it's very, very accessible. It just happens to be relatively expensive giant, Vincent Heys: man, I think maybe just one thing, uh, that I also just think about on that one is that the fund, the mutual fund [00:06:00] itself is managed according to the mandate that's been given to that fund manager. Vincent Heys: Um, and so whatever that is, whether it's a balanced fund or a hundred percent equity, and it's not really managed, um, with the client so much in mind, it's more managed according to the mandate. A Jamie Brubacher: hundred percent. And I think that's one of the downsides to, to the mutual fund space is that it's, it's immense, there is a mutual fund for everything and every one theoretically, and figuring out which one is right for you still take some advice and theoretically that's, what's happening. Jamie Brubacher: When you go into the branch is someone's supposed to do that work, figure out which mutual fund is a good fit for you. It's funny how usually if you go into a bank with a green logo, you end up with a mutual fund with a green logo, but that's generally how some of that stuff works. Vincent Heys: Okay. So let's um, the other one is an ETF or exchange traded fund. Vincent Heys: Uh, how does that differ to mutual funds? Because obviously that's, um, [00:07:00] those are a, you know, funds or concepts that's been utilized quite aggressively by, um, by retail investors now. And, um, yeah, it might be just unpack that for us. Jamie Brubacher: Sure. So ETFs are relatively new, especially compared to mutual funds, but they have been around for, for quite a long time. Jamie Brubacher: So, uh, an exchange traded fund is, is something that is also accessible to everyone, but it doesn't have that layer of, of professional management. So what I mean by that is most of the time, uh, ETFs historically have been built to track. So they might track the, the S and P TSX, which is kind of the, the main Canadian equity benchmark, or they might be built to track the S and P 500, which is, you know, the top 500 stocks in the United States. Jamie Brubacher: And what it does is it gives clients a very cost-effective way to get access to a broad [00:08:00] market or a broad index. No. Over the last kind of five, 10 years, they've gotten very specialized. You can buy an ETF that is, you know, is only on the price of oil and has leverage and all these other types of things. Jamie Brubacher: You know, they're, it's a good tool because it is. Relatively cheap, but it doesn't come with that layer of what's right. For me, which ones should I use to build my portfolio if you're doing it on your own. Um, but, but they are good tools and they're very, cost-effective Jamie, Vincent Heys: you mentioned something earlier about the ETF in terms of not being managed actively, uh, but rather track the index. Vincent Heys: And I think it's important just for our listeners. You know, sometimes they might hear the word. It's a passive portfolio and that's exactly what it is. It's tracking an index. Um, so there's no actively managed person behind that portfolio to select the [00:09:00] stocks behind it. Jamie Brubacher: That's that's it. Exactly. And I think the other important thing that people should know about indexes is an index is not an investment portal. Jamie Brubacher: Generally most of the popular indexes you read in the paper or, or see on Yahoo finance, they are indexes that are just comprised of essentially by size. So the bigger the company, the bigger their weight in the index and in Canada, specifically where the stock market is, is really concentrated in a couple seconds. Jamie Brubacher: You know, 30% of the TSX for instance, is in financials because we've got, you know, some of the world's biggest kind of most profitable banks, they make up a very big component of the index. Um, personally, I wouldn't say that anybody should have 30% of their money in a single or a single industry. Um, even if it is Canadian financials, which, which have been great. Jamie Brubacher: Um, so I always think that's the, [00:10:00] the, the drawback is. Clients will sometimes look at well, if I just buy the TSX, that's my portfolio and they're not portfolios. They're just a collection of stocks based on size. And if a company gets bigger, uh, they go up in, in weight. If they get smaller, they go down in weight and it has nothing to do with what the underlying businesses. Vincent Heys: So normally it's a, it's a good tool to use an ETF. Um, I think what it's also maybe important is that some of, most of those funds are pretty, um, cost-effective cheap, but as you say, some of those funds could be expensive. If it's a exotic kind of ETF, I'm not sure what the pricing is on like a Bitcoin ETF or as you said, well, but if you see a fund which is called an ETF, Uh, and don't just make the assumption is cheap. Vincent Heys: Not, they normally pretty cheap, but some of the exotic ones could be a bit more expensive. Jamie Brubacher: Yeah. And the ones that are [00:11:00] cheap are the big ones, right? The S and P 500 ETF is, you know, a couple basis points or 0.05% of of assets is what it costs. And then there's a brokerage fee to buy it. So it might be $9 and 99 cents. Jamie Brubacher: Like the big ones are absolutely very cost-effective. To your point there, they're starting to launch actively managed ETFs, which is kind of a mutual fund packaged in an ETF. And it, you know, guess what it comes with a higher fee. So you're absolutely right. Just because it's an ETF doesn't mean it's cheap. Jamie Brubacher: Um, there's very expensive ETFs out there as well. Vincent Heys: Jamie then the other one is Stockport fires. I think the latest stats is that 40% of the tray that goes through the wall street. A retail investor. So that's definitely been picking up quite a bit, retail people, creating their own, um, stock account buying shares and bonds, and these kinds of things, Robin hood late last [00:12:00] year, uh, end of last year. Vincent Heys: Um, maybe just talk portfolios, uh, maybe just explain that to us. Jamie Brubacher: Yeah. So I think this is kind of the most classic way. Uh, people have invested over the last kind of 50 plus years is, uh, you, you look at the idea of I'm going to build, I'm going to go out and pick stocks. Some people are into it and do a lot of reading and research. Jamie Brubacher: Um, some people might do it based on what they've recently read or something. A friend or family member, uh, talks about. Hm. You know, it's, it's very cost-effective because you're just paying, you know, in some places like Robin hood, for instance, it doesn't cost anything to buy a stock it's free. Um, you can do it with small amounts of money, but I think the, you know, there's no safety net in the sense of there's no regular, there's no regulator. Jamie Brubacher: That's looking over your shoulder or anything else to see. Does buying stock a, is that appropriate for you and your family? Um, so there's no, [00:13:00] there's no guard rails when it comes to building a, a stock portfolio, if you're going to do it by yourself, but it is, I mean, it is look, it is very effective and there are lots of stories out there of people who bought, you know, bought Amazon when it was really cheap. Jamie Brubacher: And now, you know, they've made all this money on Amazon, but there's, there's lots of those stories, but the stories that you don't hear necessarily are the ones. That, that didn't work out, you know, no one tells you about the stock they bought that went to zero. They always tell you about the one that, that went up, you know, went to the moon if, if you're Elon Musk. Jamie Brubacher: Right. So I think it's important. We're Vincent Heys: going to keep quiet off of our Netflix, uh, shares and those kinds of things. We're not going to mention them at the barbecue anymore. Jamie Brubacher: I mean, probably not. Um, depending on how early you bought Netflix, but I think the point for. Uh, for people to think about is how much time and energy do they want to spend figuring out which stocks are right for them. Jamie Brubacher: And I think this is where it kind [00:14:00] of. Parlays into kind of the next category, which is a managed portfolio where, you know, there there's somebody whose job it is to look and find these companies and do it in, in a, in a specific manner. Right. And, and usually it has a specific style and I know. Um, we can talk about that. Jamie Brubacher: I, I think about the team at Sydell, for instance, that does stock research. It's all they do. It's it's 100% their job is doing research. Um, I think, I like to think that we get it right more times than we don't, but it's not a perfect, it's not a perfect science, um, things are missed and, and, and things happen. Jamie Brubacher: And I w w I just want. How much, if you have lots of time and you can do it fantastic. But, but for most families, I would argue there isn't enough time in the day to do it Vincent Heys: efficiently. So how does the ed portfolio at a, at a fund management company like Sandel and other similar ones, how would a portfolio for [00:15:00] client differ to a portfolio of, of let's say mutual funds or. Vincent Heys: Uh, ETFs. Um, if they come to you, obviously the size of the portfolio, as you said, you know, that's important. Um, you know, if you go to mutual fund, you can invest from $5, upwards of $20 upwards to anything the same with an ETF, uh, with your stock portfolios also doesn't cost anything, but there's a, there's a limit in terms of minimum limit, normally, uh, with, uh, with, uh, third-party portfolio. Jamie Brubacher: Yeah. So there's always going to be a limit, um, based on how much invest the, the term that everyone uses is investible assets. So families have lots of families have assets. Your home is an asset. If you, if you own your car, it's an asset. Investible assets are, is, is wealth, essentially that you can. Into an investment vehicle or, or into an investment market. Jamie Brubacher: So we can't take your car and invest it in a [00:16:00] portfolio. But if you do have, you know, cash or bonds or GICs, or other types of financial instruments, those all make up your kind of investible assets. And so what firms like Sydell and others on the managed side is. Before we even get to, what is your portfolio look like? Jamie Brubacher: We do a lot of work upfront on trying to figure out what the family's objectives are. So you you're saving this money or you have this. Um, what's its purpose. What, what are you trying to accomplish with it? Right? It's uh, it's something that you're going to, you should have an objective for, and it might be, I want to pay for my kids' education. Jamie Brubacher: I want to use my wealth to help get my kids homes, especially if they live in GTA where it's very, very expensive. You don't give my kids a head start. Um, I want to. Retire and live off the income generated from my portfolio. A lot of work for us is spent upfront, trying to [00:17:00] figure out what that objective is and then it gets into, okay, well, what are the best tools to use in order to accomplish that objective? Jamie Brubacher: And I think. From site sales perspective. And one of the reasons why, you know, for us, you know, clients need to have a decent amount of investible assets is because we're going to put all that upfront time and energy into making sure we can get it right. And get that objective set up. Vincent Heys: Jamie, if you look at the industry, what is that minimum value? Vincent Heys: Normally for four fund managers, professional fund managers to take on a new. Jamie Brubacher: So usually, I mean, there's, if, if I look at the big banks and my understanding of how the banks break up kind of wealth, it's, you know, sub if you have less than 250,000 of investible assets, you, you end up at the brand. Right. Jamie Brubacher: Somebody you maybe, maybe somebody in an office at a branch, um, between two 50 and seven 50, you probably get yourself [00:18:00] into somebody that has an office within the branch, or maybe is. Um, focused on wealth. This is kind of all they do. Um, and then north of seven 50, usually you get into the range of, of working with a boutique investment management firm where, uh, there's all that planning can can happen and all that, uh, investment objective work can happen upfront and there's enough assets that we can essentially put in place our strategy, our approach, and make it, you know, cost of. Jamie Brubacher: And Vincent Heys: maybe just a final point on that, uh, within your, within the license of a fund manager, then obviously that can include anything in a portfolio that can include ETFs, uh, shares, bonds, cash, property reads. You can even include mutual funds if you have to. Um, so it's, it's really a combination of then different, uh, investment vehicles to include in that. Jamie Brubacher: Yeah, and I think, I think that's an important [00:19:00] point with all these different kind of levels of service. There's also the regulatory or the licensing required to offer that service. For instance, um, if you, you could have a mutual fund license, which allows you to purchase and sell mutual funds to clients. Jamie Brubacher: The onus on picking the right securities and stuff like that happens within the portfolio manager, that's managing the mutual fund. So there's less worry or less risk that the person selling the mutual fund is going to make a kind of a fatal or financially fatal mistake for the family. The second kind of level. Jamie Brubacher: Uh, if you want to think of it that way as levels, um, is, is in the brokerage world where you've got somebody who's ha is able to essentially present ideas or strategies. But the decision to make an investment or not make an investment is actually still on the client. So someone would call, uh, or discuss with you. Jamie Brubacher: We'd like to recommend you do a, [00:20:00] uh, and you need to decide yes or no. If a is right. And then that third level, which is kind of the, I would argue the kind of the gold standard from an advice perspective is for instance, what Sydell does, where we offer discretionary portfolio management, which means the advice and decisions made for your portfolio are on your, um, your wealth consultant or your essentially your client portfolio manager, people like myself. Jamie Brubacher: And, and what that means is it takes the. Burden of is this right for me off the client shoulders and onto a professional investment or professional portfolio manager. And so from site L's perspective, we would decide whether stock a goes into your portfolio, stock B, we would help essentially determine what your mix is and all that good stuff. Jamie Brubacher: And that's why we spent so much time upfront, making sure we've got the objectives clear. So that with that discretion, we're using it at. [00:21:00] Vincent Heys: Great, thank you. In the investment world. And, and also in, in, in any other industry, there's a lot of jargon, a lot of, uh, words been used. And I think that's maybe why a lot of people don't read the newspapers on the financial side, just because there are so many jargon used. Vincent Heys: So we want to keep clear off some of those things in a, you know, as we tell the. The stories and these concepts to, um, to clients, one thing in terms of the investment styles. Uh, can we maybe just talk about that a second? So when we, so when a client comes to a fund manager, uh, or even buying a mutual fund, sometimes they might talk about, um, that the fund manager has a value or growth investments. Jamie Brubacher: Yeah, absolutely. So the investment industry has done a great job of creating styles on top of styles. If you know what I mean? Like there's, there's a style for everything. Um, and, but if you were to [00:22:00] peel it all back and go back to kind of the fundamentals, some would argue that there's really two kind of core investment styles or approaches one is, is, is value. Jamie Brubacher: And this would be quoted as kind of. You know, the Warren buffet way of doing things, which is I'm going to find a company where the market or its value in the market currently is under, essentially under appreciating or undervaluing. What that company is really. Right. And, and, and that would have been Warren Buffett's kind of approach to a lot of these things is by good quality companies for cheap and, uh, hold on to them. Jamie Brubacher: That's, that's kind of his, you know, in a nutshell, there's obviously lots more complication. The opposite side of that from a growth standpoint is I want to find companies that have these fantastic trajectories around. Right. And they are going to [00:23:00] change the world for one, one thing. Another either it's a product or a concept, or, you know, there's been lots, especially recently, growth has been the style. Jamie Brubacher: That's, that's very much rewarded investors. There's been more ETFs for instance, launched based on growth types of portfolios. And it's really just looking at some of the fundamentals for the company. Um, if I think about how these styles kind of apply to Sydell, we would actually argue. You know, trying to split the market into value or growth is a little bit difficult because there's tons of nuance in between there. Jamie Brubacher: And so from our perspective, we look for, for quality. We look for cashflow, we look for things that, again, we can, we can hold, but we're not solely focused on making sure, you know, we get the deepest value because sometimes things are priced low for a reason the company's broken or it can't be fixed or. Jamie Brubacher: Uh, the market may be misunderstanding where, where the future is. Um, and you know, you want to avoid those. [00:24:00] So I think that's a bit of a breakdown. And as I said, there's tons of nuance in between there, but those are the kind of the two main styles. Growth has been the winning style over the last, essentially since the financial crisis with interest rates going up now, however value is, is actually starting to make a bit of a. Vincent Heys: So, um, companies like Procter and gamble and banks would be classified as value. Um, so big companies longterm, uh, they might not grow that quickly. Uh, maybe giving some more dividends as we go forward, as opposed to growth stocks like a Tesla or like, um, Facebook, Twitter is off the charts now, but, uh, some of those technology companies that used to be. Vincent Heys: Growth orientated where they don't give dividends. Amazon might be as well, high growth share prices go up, but there's no dividends. They pay out to the investors. Is it fair to say? Jamie Brubacher: Yeah, I think typically that's the case, but again, you could [00:25:00] always find a growthy bank or a deep value bank. And I think this is where it might become difficult for, for investors is trying to determine, okay, well, which category is it in? Jamie Brubacher: And, and the interesting thing. That's happening. If you think of a company like apple, for instance, you know, apple is such a large business today, there is, they, you know, there is still lots of growth opportunities for them. Um, but it, it doesn't carry the same growth risk that Tesla has. For instance, where the Tesla stock is, is relatively very expensive, but they're. Jamie Brubacher: Could be, uh, astronomical. Right. And it's just, again, it's just a different style, a different approach. And I think from an investor standpoint, if you're thinking about either investing on your own or using a professional manager, you do want to have an appreciation for how do they see the world, right? Jamie Brubacher: How are they thinking about investing? Do they, are they looking for the next Tesla [00:26:00] or are they looking for, you know, the next apple, uh, uh, you know what I mean? To the point that once apple became well-established and, and was able to generate all that cashflow, uh, you know, as an example. Vincent Heys: Thanks Jamie. If we, if we just think about, um, or just helping people just to read more of the financial news, You know, I'm always trying to get my kids to read the newspaper. Vincent Heys: And there are so many ratios in the, in a newspaper, you know, if we just think about, um, stocks and bonds and heals and these kinds of things, maybe if we could just take two, I mean, obviously people can just Google this stuff and, and get a good definition, but maybe the two most important ones is what they explained yield in the newspaper. Vincent Heys: When you look at different shares, uh, what is a yield or dividend yield? And then the other one has a, a B over an E, which is a price earnings ratio. He might just give us a quick view in terms of, uh, that. Jamie Brubacher: Sure. So on the dividend yield, um, number [00:27:00] that you might see in the paper attached to, to a stock, um, this is essentially assuming nothing changes at the company level based on their current dividends. Jamie Brubacher: Usually companies in north America pay a dividend every three months. So they paid on the quarters. Uh, it's different other places around the world in Europe and Asia, there's a different schedule, but in north America, we've come used to the idea that you get a payment every quarter. So if this payment for instance, is, is 50 cents a year and the stock is trading at $10. Jamie Brubacher: It's essentially saying you've got a dividend yield of 5%. So from an investor standpoint, if you bought stock a and held it for a year, you would get an income or in dividend 5% on your money. The catch on this is that things change sometimes for the good sometimes for better and sometimes for worse. Jamie Brubacher: So. If I think about companies that we tend to invest in, we like [00:28:00] the idea that the company is increasing that amount every year. So you buy it for $10. You get 50 cents the first year, and then the next year you get 55 cents. You haven't paid any more money for the stock. You still bought it for 10, but now it starts to distribute additional income. Jamie Brubacher: And we would call these dividend dividend growers and companies that have been. You know, committed and have these great track records, excuse me, that have these great track records of increasing their dividends. On the flip side, when companies get into financial trouble, they can cut their dividends, right? Jamie Brubacher: And, and the yield is, is essentially, uh, based on the price that you're paying today. So sometimes if you look in the paper and you see a stock, that's yielding 15%, that might be because the stock is really, really low. And not because the dividend is really, really high or, or it's sustainable. Um, so I know people look at yield and think, oh, perfect. Jamie Brubacher: I'll just buy this and I'll earn my 7%, [00:29:00] but you, the moment the company makes a change or an adjustment, you don't earn your 7% anymore. Vincent Heys: Yeah. And I think that's important. Both of those ratios are backwards looking in terms of why, what happened as opposed to. Really, what is the growth on those dividends as you say? Vincent Heys: Um, and the, and the price. Jamie Brubacher: Absolutely. And it, and it kind of ties into the next ratio. That's usually in the paper, which is this P over E or, or price over earnings. And so the way to think about what, you know, what is that, that's the price you pay for a single dollar of earnings, uh, that the company generates. Jamie Brubacher: So. The, the interesting one is there's lots of companies in the stock market that don't earn any money. So their PEs are, it's a nothing number. It's, it's a, it's an N a in the paper, uh, because there is no earnings, there's nothing to divide. And then, uh, for companies that do have earnings, you [00:30:00] get this, this ratio, which is a 10 PE means you're paying $10 for every $1 of earnings. Jamie Brubacher: And again, Because the market is full of nuance. You know, you could start at the industry level. There are certain industries where there's more growth, so people are willing to pay a higher price for every dollar of earnings because they've got growth behind it. And then there's industries where, um, there isn't as much growth for instance, so you wouldn't want to pay as much. Jamie Brubacher: And I think this becomes a bit of a trap when you start thinking of. Uh, I'm a value investor. I'm a growth investor. I'm just going to go through the paper and buy all the companies that have low priced earnings. Some of them might have a low price to earnings because people are worried or the market's worried that those earnings might not be there in the future. Jamie Brubacher: And I think that's an important, um, important thing to consider as well. None of these ratios that you see in the paper can just be kind of blindly screen. [00:31:00] To build a portfolio. You, they have to, you know, there there's all the underlying pieces that go into why the number is what it is. Jamie, Vincent Heys: as you just been talking, it just kind of reminds me again, that they are so many things to look at. Vincent Heys: And, um, it's easy to buy your own portfolio when the market goes up, because everything goes up. Um, but it's, um, it's a lot more challenging when they have a volatile market and for retail investors that, um, might not have. Had the experience of 2000, uh, 2008, you know, uh, 2020, uh, and also the downsides in, in the nineties as well. Vincent Heys: So, um, it definitely becomes more complicated. Uh, it's not that easy. So if I'm convinced that I, I want to employ a fund manager, uh, I've got a sizeable portfolio and I've decided not to go for mutual fund or ETFs. I don't want to. Manage all my money [00:32:00] myself. I want to give it to a fund manager to manage me quickly. Vincent Heys: What are the, the main things that you would think that I need to look at? Uh, in my due diligence, uh, selecting a, a fund. Jamie Brubacher: So I think the most important thing right up front is to see if there's an alignment between yourself and, and like the family and, and the investment manager from a philosophy standpoint, as we've talked about over the last kind of 15, 20 minutes or so there's so much nuance to this. Jamie Brubacher: There's so many different styles. There's so many different approaches. One isn't better than the other. They're just different. And I think there's, it's very important to ensure that there's an alignment, uh, between how the investment manager is going to help you reach your goals and, and how you think, you know, if that makes sense to you. Jamie Brubacher: And what I mean by that is if I just use Sydell as an example, our philosophy is, [00:33:00] is pretty straightforward. And, and from my perspective, pretty easily understandable. Um, we look to buy. Uh, high quality companies. Uh, we look to give clients exposure outside of Canada, which is a very big component of what we do at Sydell, which is we have great Canadian strategies, but a lot of Canadians have lots of exposure naturally to Canada. Jamie Brubacher: So let's get access and get exposure to other parts of the world. Um, and then what we look for is, is, is a high quality and, and, and that's our philosophy and style. And we want to find high quality businesses that generate cash. Uh, that have an ability to compound that cash over time. Um, and, and that makes up an investment portfolio and there's, it means we do great when the markets, you know, we do relatively great when the markets are down, but if the markets are really moving up quickly or are on the back of, um, heavy growth or, or non cash [00:34:00] flow generating companies, we tend to trail behind. Jamie Brubacher: And I think there needs to be an alignment and understanding. Between the family and the investment manager on. Okay. That's great. I've seen your historical returns. Um, that's perfect. But how did you get there? And does that make sense? And is that the experience I want to have, um, from that perspective? Vincent Heys: Yeah, I think that, um, I think that that first one is key just to make sure that, um, there's alignment of how I think about my money and how I want to be managed. And then the philosophy on the other side, otherwise, It's not going to be a great end, I think for most people. And that's why, I guess I need to find the right fund manager, but the fund manager needs to find the right client as well, Jamie Brubacher: a hundred percent. Jamie Brubacher: It's got to be an alignment both ways, right. Or from my perspective, if, if there isn't, or if there's a misalignment between the two, um, just ended up, somebody ends up disappointed, um, or unhappy with, with some of the outcomes. [00:35:00] Um, Philosophy, I think is first and foremost, 100%. Obviously you want to have an understanding from a firm perspective is, you know, have they, is there a track record? Jamie Brubacher: Is that something that they just started recently? Or is it something that's been in the works for a long period of time? Is it, uh, is the philosophy or the approach proven? Can, can you see it? Another kind of key thing I think is, is when you think. What you're paying for and you're paying for active management, you're paying for somebody to do the work and make investment decisions on your behalf. Jamie Brubacher: So a common way to kind of determine if that's happening is, you know, are, is the portfolio, you know, does the whole portfolio hold 300 stocks. If they hold 300 stocks, it's going to look and feel just like one of those market ETFs. We talked about a while ago. You want to see a manager that has a philosophy in some convictions. Jamie Brubacher: They're buying this company because it fits and they're buying it in a good weight. And what that [00:36:00] means is a portfolio of Canadian stocks for instance, is in that in the thirties, right? Not in the hundreds, not in the two hundreds, but, but in the thirties is a good point. And I would argue maybe a little bit higher on the international side, but same sort of thing. Jamie Brubacher: You don't want a portfolio of hundreds and hundreds of stocks. Because it's just going to look and feel like, like the index, the other kind of side. And again, this, what I would expect if you make this move is, is just understanding your fee structure. Um, making sure it's clear and understandable in the managed portfolio space. Jamie Brubacher: It should be straightforward. It should be the amount of money you had. And it's a percentage based on those total assets. And I mean, there's lots of different kinds of pricing setups, but for the most part, it should be clear and understandable and you should be. You should always feel like you can ask the questions if there's parts of the fee structure that you don't understand. Jamie Brubacher: And if I would argue with the investment manager can explain it to you easily and quickly. Um, maybe it's not the right [00:37:00] fit. The one thing that I think goes completely underappreciated by a lot of investors is the idea of where is your money actually sitting, you know, And we've moved to a very digital place where money is, is a number on a screen. Jamie Brubacher: Uh it's it's bits and bytes, but it's always good to understand. Okay. Well, where does my money sit? So the, the term for this essentially is, is custodian. So where. Uh, and a custodian is a type of bank or trust company that's essentially, uh, regulated and mandated to hold client assets. So it can be, they hold stocks, they hold bonds, they hold cash. Jamie Brubacher: They're meant to be the keeper of things. And there are there, they're also the recorder of things. So they would keep track of, uh, how much of this do you have and how much of that do you have? You know, from our [00:38:00] perspective, knowing exactly where your money is is, is very important and, and how it's structured. Jamie Brubacher: It, it might be a little esoteric or, or foreign for a lot of people, but I think they're important questions to ask and, and you should be comfortable with the answer. Vincent Heys: Thanks, Jamie. Yeah, I think I agree with you. Um, you know, when I also look at this, probably the two that stands out to me is the investment philosophy. Vincent Heys: And then secondly, the custodian that's, that's where. Um, where it can really go pay shape if something happens to the custodian and it doesn't go from a draw down of 5% or negative return of 5%, it goes to, it goes to zero. So, um, uh, so that custodian is super important. I think the last one that, uh, Uh, maybe just that I want to mention it just, and again, it's back to the clients, you know, what does the client see? Vincent Heys: And, uh, you know, the type of reporting, I think that's, that's maybe the last one, the top of the reporting that the client gets, you know, is it customized? Is it [00:39:00] accessible? Is it online? Uh, and I think that just the difference between a, um, a mutual fund and an ETF again, you'll get the fun factor. All of that portfolio, uh, or that fund, whereas within the managed portfolio, it's reported on your specific allocation as opposed to a fun fact sheet. Vincent Heys: So I think that's just important that the listeners just understand that when I go to a fund manager that they will get reporting done specifically based on, on their portfolio, as opposed to, um, I fun fact sheet or you something. This, and this is, this is great. Jamie, I'm just, you know, uh, I know that the time is running out. Vincent Heys: I think about this, uh, this guy listening to this podcast, he has, he has ETFs. He has mutual funds might be as good. A Robin hood stock portfolio might be as a managed account already. What would you say to, um, just broadly, if we look [00:40:00] at this guy listening, he has all these things. What are two or three things that he, he or she can go and do to know whether they get the right value for money. Vincent Heys: All right. You know, should I stay in this world of mutual funds? Should I stay in a world of a managed portfolio? What are two or three things that, that, that you can maybe give them homework to go in and check out and see whether they're in the right in the right. Uh, Jamie Brubacher: So I think the first, the first piece of homework is, is how much time and energy do you want to spend? Jamie Brubacher: Like, does the family want to spend on doing this? Right? And if one thing I hope comes across and from our conversation is that. This is, this is a time and energy type of intensive kind of approach, right? Especially if you're looking for a specific outcome, things change fast, um, things are always changing and having a partner or somebody looking out for you, I [00:41:00] think is, is important. Jamie Brubacher: Uh, if you're not able to spend the time or energy. And I think that's, again, that's one of the things that, uh, is. The other thing I would look at is, you know, based on the size of your portfolio, just trying to get an appreciation for. Where the fees are, what they are. Are you getting value? And again, buying mutual funds, um, there's there's value there. Jamie Brubacher: Yes, they can be relatively expensive, but they're very accessible. They come with tons of regulation and, and for small amounts of money, if you're just starting out, it's, it's a, it's a great way to start getting exposure to investing in what can happen as you get larger and your objectives become a little bit more defined. Jamie Brubacher: It's not just, well, we're saving now. We'd like to save for this, or we'd like to do this or generate this. Um, that's where I think you can start looking at again, it becomes a. Uh, time equation, how much time and energy do you want to spend, or is this something that you want to [00:42:00] outsource? And I think that outsourcing part is, is really just trying to explore. Jamie Brubacher: Is there a partner out there that I can get alignment with from a philosophy standpoint, that I can get an understanding of how they do what they do and, and help me meet my objectives. And I think that's where that's where you can kind of start looking, um, and hopefully use some of the things we talked about today is as kind of guidepost to what. Vincent Heys: Jamie, thank you so much. It was great to have you on the show. And I think there's some really good points there for investors to look out for and to structure their portfolios that are the value for money and that they feel comfortable in terms of investing. Vincent Heys: Thank you so much. Jamie Brubacher: Perfect. Thanks for having me. Jamie Brubacher: Appreciate it. Jamie Brubacher: Hey, thank you so much for listening to our podcast today, you can find our content on wealthstack.ca or on LinkedIn. I'm Vincent Heys and you've been listening to the financial wellness podcast series.[00:43:00]

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