Category: Investing

Floating Rate Notes – a timely idea for fixed income investors

Posted By Stephen Hafner On March 13th, 2013

Our first order of business is always to protect capital. (If you’re a client or a reader of this blog you likely know that’s been a constant theme in everything we do.)

In anticipation of a potential rise in interest rates, one of the risks investors should be concerned about is a decline in bond values – what many investors typically think of as “the safe stuff.” If that sounds like a dichotomy it really isn’t. Generally speaking, when interest rates go up, the value of a bond declines. The longer the maturity of the bond the more it falls. (Read our earlier posts Convexity and bonds and Is it time for bond holders to rethink their strategy?)

To protect our clients’ fixed income investments against rising interest rates — which are inevitable at some point — we’ve been shortening the duration of our bond holdings (now 3 years on average). In addition to that strategy there’s another idea we’ve implemented in recent weeks: Floating Rate Notes (FRNs). [read more >>]

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Tags: Interest Rates, Investing

Is it time for bondholders to rethink their strategy?

Posted By Peter Churchill-Smith On January 24th, 2013

At this time last year, two key issues were front and centre for us. We were concerned about more fallout from the economic uncertainty in Europe and the U.S. There did not seem to be any clear plan in place to resolve the debt and deficit issues. We were also concerned that interest rates would finally hit bottom and start to climb. Both issues caused us to be cautious with our clients’ capital in 2012.

The threat of rising rates has been hanging over the heads of all investors for some time now. Quite surprisingly, rates did not rise in 2012. In fact, they fell – about 0.60% in Canada. Why? Because more stimulus like the Federal Reserve’s bond buying programs was needed to re-ignite the economy.

In anticipation of rising rates last year, we accelerated our plan to diversify our sources of yield for our clients. We added more income-producing real estate, residential and commercial mortgages, corporate bonds and dividend-paying stocks. With rates falling, these investments performed well in 2012. [read more >>]

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Tags: Interest Rates, Investing

Looking for income? Try looking south.

Posted By Peter Churchill-Smith On December 11th, 2012

We look everywhere for income.

Throughout our history, we have been able to earn attractive income-based returns for our clients ranging from the conventional (i.e. corporate bonds) to the hard to access (i.e. mezzanine debt on a privately-owned self-storage business).

We are not alone in the pursuit of income. Investors throughout the world have been seeking yield in an era of low economic growth and mediocre equity returns. As a result, money has flooded into every popular idea and driven up the prices and, regretfully, driven down yields.

Specifically, a lot of money has flowed into Canada’s real estate market – a sector that has been a reliable source of income for us and other investors. Much of the interest has come from overseas. Foreign investors have liked our real estate, our economy, our currency and our stable political environment. This inflow of capital has pushed up prices to the point that we now think there are more significant risk/reward opportunities elsewhere. [read more >>]

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Tags: income, Real Estate

Finding investment opportunities when the economy isn’t handing them out

Posted By Peter Churchill-Smith On November 27th, 2012

Last week, we organized a lunchtime panel with four outstanding financial minds that are part of the pool of talent we have to draw on for the management of client investment portfolios:

Maureen Farrow, (economist), President, Economap
Tye Bousada, (global equities), President & Co-CEO, Edgepoint Investment Group Inc.
Rick Grafton, (energy), CEO, Grafton Asset Management
Corrado Russo, (real estate), Managing Director, Global Securities and Investments, Timbercreek Asset Management Inc.

It was a lengthy and meaty conversation about the state of the global economy, how Canada is faring and what it all means for clients of Newport Private Wealth. This summary won’t fully do justice to the depth and scope of the presentations, but we will try to boil a 90 minute discussion down to a readable blog post for you.
[read more >>]

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Tags: asset management, Investing, Real Estate

When will natural gas prices turn?

Posted By David Cole On May 9th, 2012

Record warm temperatures made for a comfortable Canadian winter this year. But they’ve caused a chill in the energy market. Particularly natural gas prices which dropped to a 15 year low.

What’s the cure?

“Low gas prices” is the standard response from industry experts. Low prices spur demand and cut off supply. It’s just a lesson in economics.

[read more >>]

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Tags: Investing, Making Sense of the Economy

The 3 most common portfolio woes — and how to fix them

Posted By Kelly Willis, Editor On April 12th, 2012

Earlier this year, our Managing Director and Chief Wealth Management Officer, David Lloyd published a month-by-month Personal Finance Checklist to help readers organize and optimize their financial affairs and it’s been a popular post on this blog.

April is a good month to review your portfolio after first quarter results are in: Perhaps a little ‘spring tune-up’ if you haven’t revisited your strategy in awhile?

On that very subject, here’s a link to an article by Stephen Hafner, one of our Managing Directors & Portfolio Managers, written for the website Accretive Advisor. Stephen identifies the three
most common portfolio problems we see — and how to fix them.

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Tags: Becoming a Better Investor, Investing

How (not) to choose a financial advisor

Posted By Kelly Willis, Editor On March 5th, 2012

Last week a friend of mine asked me for help with his portfolio. His portfolio hadn’t made any money in eight years and he hasn’t made RRSP contributions for the past two years because he’s been so unhappy with the performance. He’s already switched advisors once (in 2008). Right now he’s feeling stuck and wondering what to do next.

[read more >>]