To reach your long-term goals you need a portfolio that can get you there. In its simplest form, a portfolio is typically made up of stocks, bonds and cash. But the portfolio your advisor builds for you isn’t simple.
With sophistication comes the need for experienced investment professionals situated around the world, helping your advisor with access, innovation, expertise, value and time to enhance your portfolio. Managed money helps with that.
Here’s why your advisor might use managed money in your investment portfolio:
1. Access
The investment world has expanded, bringing you new, advanced options that could boost your portfolio’s growth. Examples include: emerging market stocks and bonds, growth-oriented stocks, value-oriented stocks, specialty credit securities, real assets and small/mid-cap companies.
These types of investments may be tough for your advisor to access on their own. Some investments require currency conversions, regulatory permissions/licenses and specialized market expertise. Therefore, your advisor may use managed money to remove barriers to more easily access these investment types, passing on the benefits to you.
2. Innovation
One way to access investments that are otherwise tough to access, is to simply invest in the broad market index. But often these market indices contain investments you wouldn’t really want in your portfolio. Perhaps they’re underperformers, for example. Or they may duplicate something you already hold.
Actively managed solutions give you exposure to strong businesses that are better positioned to produce high quality earnings and cashflow. This is particularly important in less-followed asset classes where markets tend to be less ‘efficient’ – which can lead to less precise pricing and other potential risks for investors. Your advisor may use actively managed funds or ETFs to improve upon broad market indices and offer a better outcome for your portfolio.
3. Expertise
Picking securities like stocks and bonds is extremely complex. The investment landscape needs constant analysis. Rapid market shifts are the norm and changes in the economic landscape are frequent.
Managed money is designed to navigate today’s market complexities. Through professional oversight managed money aims to deliver higher returns with a smoother investment experience. However, it’s important to choose the right firm to manage your money. Your advisor engages in due diligence of investment managers to ensure that a mutual fund or ETF in your portfolio is managed by experts who can deliver strong outcomes.
4. Value
While managed money has a lot of benefits, not all mutual funds and ETFs are alike. And they don’t all offer value for the fees that they charge.
A managed solution typically offers value when it’s giving you higher returns after fees than what could be found elsewhere. Your advisor will evaluate to ensure you are receiving outperformance that’s greater than the fees you’re paying. Other managed products are designed to deliver different kinds of value. Some strategies offer steady performance across changing market conditions. Some offer specific levels of income. Others provide access to special investments, or to different sectors or geographies. Whatever the strategy, your advisor evaluates that the value you’re receiving from your managed money outweighs the fees.
5. Time
There have never been more investment options in the world than there are today.
There are millions of stocks, bonds, and other securities across geographies and risk profiles. Picking the right ones takes the full-time work of teams of investment professionals. It’s challenging – or rather, impossible – for a single advisor to take that on themselves.
By adding managed money products in your portfolio, your advisor can focus on what truly matters –crafting a tailored strategy to meet your unique investment goals. Your advisor can dedicate more time to strategic planning, fine-tuning your portfolio, and providing personalized guidance – all with the ultimate goal of providing better service and results to you.
At RBC Global Asset Management, we offer a robust product line-up, a wide breadth of capabilities, a proven investment track record and competitive fees. We are the largest investment manager in Canada1, backed by an unmatched team of investment professionals. Our solutions can help you reach your goals so you can focus on what matters most.