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This article appears in the September 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Portrait of Steve Nyvik

The expert

Steve Nyvik, senior portfolio manager with Lycos Asset Management Inc. in Vancouver.

The philosophy

Nyvik uses a value-oriented approach to build customized investment portfolios. He primarily invests directly in income-generating securities, as opposed to through a fund or a pool. With stocks, he screens each company for dividend yield, price-to-earning ratio, market capitalization and debt-to-equity ratio.

The scenario

John, 50, received a $10-million inheritance. He wants capital preservation as well as a steady stream of income.

The allocation

Nyvik considered John’s risk tolerance, tax situation, estimated cash needs and the economic environment. Nyvik suggested 40 stocks, equally dollar-weighted, to comprise 40% of the portfolio (70% Canadian, 30% U.S.).

  • 28% to Canadian equities such as Bank of Nova Scotia (TSX:BNS), BCE Inc. (TSX:BCE), Manulife Financial Corp. (TSX:MFC), Enbridge Inc. (TSX:ENB) and Canadian Natural Resources Ltd. (TSX:CNQ).
  • 12% to U.S.equities such as AT&T Inc. (NYSE:T), Verizon Communications Inc. (NASDAQ:VZ) and Ohio-based KeyCorp (NYSE:KEY), which operates a regional retail and commercial bank.
  •  20% to Canadian preferred shares such as Brookfield Asset Management Cl A series 18, Enbridge Inc. series A, Fortis Inc. series F and Great-West Lifeco Inc. series G.
  • 30% to fixed-income securities such as the Leith Wheeler Corporate Advantage Fund, the iShares iBonds 2024 Term High Yield and Income ETF (Cboe BZX:IBHD) and five-year GICs, which currently yield almost 5%.
  • 10% to cash vehicles such as the NBI Altamira CashPerformer Account or the Purpose Premium Money Market Fund.

The scenario

John also received a bonus of $10,000 after taxes. He has no debt and no need for cash.

The allocation

Given the small amount, Nyvik recommended:

  • 25% to the iShares BMO Canadian Dividend ETF (TSX:ZDV).
  • 25% to the iShares Core High Dividend ETF (NYSE Arca:HDV).
  • 50% to a five-year GIC yielding almost 5%.

Portrait of Michael Dehal

The expert

Michael Dehal, senior portfolio manager with Dehal Investment Partners, a unit of Raymond James Ltd.in Toronto.

The philosophy

Dehal invests in high-quality securities across several geographies. He uses a factor-based quantitative model to select securities, focusing on earnings per share, earnings growth and positive earnings revisions.

The scenario

Jane, 40, inherited $10 million. She has a long time horizon and seeks growth and income.

The allocation

Dehal suggested that Jane invest in a growth portfolio consisting of 85% equities and 15% fixed income. He recommended Jane invest in companies with strong balance sheets and solid free cash flow, and which can demonstrate sustainable growth.

  • 37.5% to Canadian equities across several sectors:
    • Energy: Suncor Energy Inc. (TSX:SU), Canadian Natural Resources Ltd. and Cenovus Energy Inc. (TSX:CVE).
    • Materials: West Fraser Timber Co. Ltd. (TSX:WFG) and Canfor Corp. (TSX:CFP), an international integrated forest-products company.
    • Technology: CGI Inc. (TSX:GIB-A) and OpenText Corp. (TSX:OTEX).
    • Consumer discretionary: Dollarama Inc. (TSX:DOL), Aritzia Inc. (TSX:ATZ) and BRP Inc. (TSX:DOO), the holding company for Bombardier Recreational Products Inc.
    • Financials: Manulife Financial Corp., Bank of Nova Scotia and goeasy Ltd. (TSX:GSY), which provides non-prime leasing and lending services.
    • Utilities: Algonquin Power and Utilities Corp. (TSX:AQN) and ATCO Ltd. (TSX:ACO.X), an international provider of logistics, transportation, real estate and energy infrastructure solutions.
  • 37.5% to U.S. equities across several sectors:
    • Energy: Devon Energy Corp. (NYSE:DVN) and Occidental Petroleum Corp. (NYSE:OXY).
    • Materials: Nucor Corp., (NYSE:NUE), a manufacturer of steel and steel products, and CF Industries Holdings Inc. (NYSE:CF), a manufacturer of agricultural fertilizers.
    • Health care: Pfizer Inc. (NYSE:PFE), AbbVie Inc. (NYSE:ABBV) and Merck & Co. Inc. (NYSE:MRK).
    • Technology: Qualcomm Inc. (NASDAQ:QCOM), Texas Instruments Inc. (NASDAQ:TXN) and Gartner Inc. (NYSE:IT).
    • Consumer discretionary: Home Depot Inc. (NYSE:HD), Marriot International Inc. (NASDAQ:MAR), Philip Morris International Inc. (NYSE:PM) and Ulta Beauty Inc. (NASDAQ:ULTA), a beauty products retailer.
    • Financials: Morgan Stanley (NYSE:MS) and Goldman Sachs Group Inc. (NYSE:GS)
  • 6% to emerging markets, via the Vanguard FTSE Emerging Markets All Cap Index ETF (TSX:VEE) and the RBC Quant Emerging Markets Equity Leaders ETF (TSX:RXE).
  • 4% to European equities, via the BMO Europe High Dividend Covered Call Hedged to CAD ETF (TSX:ZWE).
  • 15% to fixed income, via the PIMCO Monthly Income Fund (Canada) (TSX:PMIF), Mackenzie Unconstrained Bond ETF (TSX:MUB) and the BMO US Preferred Share Index ETF (TSX:ZUP).

The scenario

Jane also received an unexpected bonus of $10,000.

The allocation

  • 85% to equities:
    • 30% to an ETF tracking the S&P/TSX composite index.
    • 30% to an ETF tracking the S&P 500 index.
    • 25% to an ETF tracking the MSCI EAFE index.
  • 15% to fixed income, via an ETF tracking the FTSE Canada universe bond index.