One of the reasons we were attracted to our new firm – Quintessence Wealth – was the broader range of investment solutions offered. This month we are introducing a major enhancement to our portfolios: the Elevate Enhanced Equity Pool.
When we became Discretionary Portfolio Managers several years ago, we began by designing and testing various investment strategies. As we progressed, these became our model portfolios. These models have steadily evolved, and today – driven by each client’s risk and return objectives – each client account matches one of these models. This approach has provided significant improvement when compared with most industry offerings, but challenges still exist.
One challenge for clients with taxable (non-registered) accounts is that more transactions means more work to track the resulting gains and losses for tax reporting. A second is that smaller accounts can’t efficiently hold a large number of investments, so despite being managed to the same model, their returns did not match those of the larger accounts. A third is that our larger households often had to file a special US tax form to report on US investments held in their accounts.
Investment pools address these three issues. And more.
By transferring the current equity investments into our “Elevate Enhanced Equity Pool” (a separately coded investment held through Quintessence), we can continue to hold the same investments for our clients. Further advantages include:
- Simplicity at tax time – the pool is seen as one single investment, so it produces only one tax slip
- Available for all sizes of accounts – whether an account has $30,000 in equities or $1,000,000 in equities, an investor will have the same portfolio diversification and growth potential
- No US tax forms are required – the pool is deemed to be Canadian (even if it holds $US investments)
- Institutional pricing – we negotiated institutional pricing for several of the managed holdings in the pool, so the costs should be similar to or lower than what they currently are
- Risk management tools – within the pool, we can overlay risk management strategies (for example, currency hedging). These strategies can further reduce downside market risk, but would not be available if we continued to manage the equities in individual accounts
We will continue to trade in “bulk” inside the pool, ensuring reduced costs and identical pricing on trades for all accounts whether large or small.
We look forward to discussing the concept further when we next meet!