A personal message from our CIO.


As the World Turns — Looking back at 2020


How are you?


Something that we ask regularly, as a nicety in polite conversation, yet it is probably the singularly most important question we can ask ourselves, as 2020 comes to a close, and we reflect on the last twelve months of our lives.


When I made the decision to join WealthCo in early 2020, the words ‘global pandemic’ had not entered our daily jargon. After spending over a decade with the Abu Dhabi Pension Fund, building and developing a Global Private Markets Portfolio through investments in private equity, real estate and infrastructure, I was able to enhance my understanding of the benefits of the potentials for return enhancement and diversification. Joining WealthCo allowed me the opportunity to be part of an organization that shares my philosophies on investing and embodies a culture of integrity – where success is built on mutual respect, trust, and partnership. It also didn’t hurt that Calgary is close enough to my home-town, so that I can still slip on my number 99 jersey, grab a pint and catch all the games live!


WealthCo believes in the benefits of pooling capital and investing in private markets, to diversify from the volatility of public market investing. These same strategies have been used successfully by pension plans, endowments, sovereign wealth funds, and ultra-high net worth investors for many years. The Canadian Pension Plan (CPP) portfolio of ~ $235 billion has significant exposure to private equity (24.7%), real estate (11.3%), and infrastructure (8.6%).


*Source - https://www.cppinvestments.com/the-fund/our-performance/financial-results/annual-results


The Way Forward


I am excited to build on WealthCo’s platform, designing client-portfolios that replicate institutionally-managed pension plans. Areas of enhancement include: increasing global diversification, given the differing valuation multiples across public markets, and investing in economies that will benefit from secular growth. JP Morgan Asset Management’s long-term capital market assumptions highlight the expected relative return differential of investing in higher growth economies (U.S. large cap 4.1% vs. China 6.6%).


SELECTED DEVELOPED MARKET EQUITY LONG-TERM RETURN ASSUMPTIONS AND BUILDING BLOCKS

*Source - J.P. Morgan Asset Management; estimates as of September 30, 2018, and September 30, 2019. https://am.jpmorgan.com/us/en/asset-management/institutional/insights/portfolio-insights/ltcma/equity-market-assumptions/


SELECTED EMERGING MARKET EQUITY LONG-TERM RETURN ASSUMPTIONS AND BUILDING BLOCKS

*Source - J.P. Morgan Asset Management; estimates as of September 30, 2018, and September 30, 2019.

* China refers to MSCI China Index.

https://am.jpmorgan.com/us/en/asset-management/institutional/insights/portfolio-insights/ltcma/equity-market-assumptions/


The Portfolio Management team has been active in private markets over the last few months, committing incremental dollars with our partners in the following strategies:

  • Growth Capital – One of the largest global, alternative asset managers investing in high quality late-stage growth companies

  • Structured Credit – Asset manager ($30 billion of AUM) that invests in illiquid credit securities during periods of dislocation; portfolio generates high cash-on-cash yields with opportunity to realize capital appreciation on credit quality improvement

  • Special Situations – Asset manager ($30 billion of AUM) that manages an all-weather corporate credit portfolio focused on risk-adjusted returns

  • Opportunistic Real Estate – Global RE manager ($60 billion of AUM) over the last three decades of investing through multiple distressed RE cycles

  • Real Estate Debt – insurance company ($80 billion of AUM) heritage results in high credit-quality first/second mortgages

So…going back to the question: “How are you?”


The answers to this question are instrumental for designing the map we follow, as we move forward. The opportunity to speak with clients and hear their desire to own a “sleep-at-night” portfolio reinforces the expectations of our clients and guides us in how to best fulfill them. We have a responsibility to construct portfolios that are well-researched and fundamentally sound. We work with “best-in-class” asset managers around the globe, through a deep network of relationships, cultivated over twenty years. These firms have an edge in processing information and data, resulting from their long-term investments in people, technology, systems, and processes, on a global scale. WealthCo expects this access and approach will have a significant impact on our clients as we move into the next decade.


How are WE?


As we celebrate twenty years in the industry, we have also taken the opportunity to reflect. In addition to being a passionate team, we are mindful that we have the fortune of working with great partner accounting firms. We would also like to express our sincerest gratitude for the trust our clients have placed in us, to manage their nest eggs with the fiduciary care that is essential during the period of lower growth and increasing market volatility, which we have seen throughout 2020.


Peter Lieu, CFA

Chief Investment Officer

WealthCo Asset Management

This website was designed to enhance connection - not replace it. 

WealthCo is a corporate group that includes, WealthCo Planning Services Inc. and WealthCo Risk Management Inc. and WealthCo Asset Management Inc.  Investment Management services are provided under WealthCo Asset Management.  That firm is registered as an Exempt Market Dealer in the provinces of Alberta, British Columbia, Manitoba, Saskatchewan and Ontario.  It holds a Portfolio Manager license in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan and an Investment Fund License in the province of Alberta.  The information in this website is directed to individuals registered in those provinces.  The information provided here is for general information purposes and should not be construed as providing advice.  WealthCo has not independently verified any information set out herein.  Any opinions set out herein are subject to change and WealthCo does not undertake to notify the reader of such changes.