Tactical allocations for inheritances and bonuses

The philosophy:
Bhatia and his team focus on finding a balance among growth, income generation and capital preservation. He seeks quality investments with strong, risk-adjusted returns and builds strategically allocated portfolios that shift tactically when market conditions or client circumstances dictate.

The allocation:

• 80% to the FT Balanced Income Private Wealth Pool, which includes 35% Canadian fixed income, 16% international equities, 15% Canadian equities and 14% U.S.equities.
• 15% to the Franklin Global Real Assets Fund II, which has exposure to private and public real estate. The position can lower volatility and potentially generate income.
• 5% in cash to supplement potentially insufficient income from the fixed income portion of the portfolio.

“The lack of liquidity of private investments shouldn’t have the same impact on an individual who is unlikely to need the lion’s share of the investment in the short- or midterm,” Bhatia said.

“While growth would not be the primary requirement, it is important to maintain purchasing power with a lower-risk, balanced portfolio.”

The allocation:

• 100% to the Frank l in Quotential Growth Portfolio, which has an asset mix of 80% equities (U.S., Canadian, global developed, emerging markets) and 20% fixed income (Canadian, global) and is actively rebalanced.

“The equities portion of the portfolio would provide long-term growth, while the fixed income portion would be more to mitigate equities volatility than to produce a current income stream,” said Bhatia, who assumed Jordan has a moderately aggressive risk tolerance.

The expert: Priscilla Ncube, investment advisor with Mandeville Private Client Inc.in Toronto

The philosophy: Ncube provides wealth-seeking investors with access to public, private and alternative investment opportunities by using separately managed accounts. She incorporates active management to enhance return potential and alternative assets to mitigate risk. The private and alternative products are available only by offering memorandum and other exemptions to investors who meet certain eligibility or minimum purchase requirements.

The allocation:

• 10% to 1-to 5-year laddered GICs as a cash wedge and to take advantage of tactical opportunities.
• 7.5% to the Lysander-Canso Corporate Value Bond Fund, which offers higher yields than government bonds and provides diversification.
• 7.5% to the BMO Laddered Preferred Shares ETF (TSX:ZPR), a diversified portfolio of rate-reset preferred shares, which have lower interest-rate sensitivity than bonds do.
• 5% to the Mackenzie US TIPS Index ETF (TSX:QTIP) to hedge against inflation.
• 25% to the Mandeville Income Equity ADR, a concentrated portfolio of 12 to 15 Canadian securities delivering dividend income and risk-adjusted returns.
• 25% to the AGF Global Select ADR, which invests in companies with strong balance sheets, defensible barriers to entry and long-term growth prospects.
• 10% to the Hazelview Four Quadrant Global Real Estate Partners LP (or Fund), a globally diversified REIT delivering a stable income stream that rises with inflation and growth.
• 5% to the Portland Private Income Fund, a diversified private debt fund that includes commercial mortgages, commercial loans, global maritime loans and global infrastructure loans to provide predictable income yield.
• 5% to the Picton Mahoney Fortified Market Neutral Alternative Fund, which has low volatility and low correlation to equities.

“Private and alternative investments provide diversification benefits to the portfolio, as their relatively low correlation with traditional asset classes helps mitigate portfolio risk stemming from market and business cycle volatility,” Ncube said.

The allocation:

• 100% to a medium-term balanced separately managed account, comprising the Trez Capital Yield Trust (60%) and Port land Focused Plus (40%).

Ncube said this mandate is “suitable for investors with a growth-focused, medium-term investment horizon. [The mandate] provides a combination of income and capital appreciation through exposure to income-and growth-oriented investments, including private real estate, private credit and leveraged equity.”