What’s the strategy?
The Core Bond (Portico) portfolio strategy invests primarily in government bonds and high-quality corporate bonds with a variety of maturity terms and credit risks to create a highly-diversified core Canadian bond portfolio.
The portfolio manager’s goal is to outperform the FTSE Canada Universe Bond Index by seeking to optimize yield opportunities, while maintaining prudent diversification to moderate volatility and preserve capital.
The portfolio manager pursues a consistent, measured and disciplined approach to capture incremental gains through a multi-factor approach to analyzing interest rates, credit markets and yield curves. The portfolio manager manages the portfolio within a moderate variation of the index duration.
This purely Canadian bond portfolio is highly diversified by sector, term and issuance, with a focus on capital preservation and a long-term view towards conservative, stable income and capital appreciation.
Dale Haynes further explains the Core Bond strategy
Dale highlights his focus on helping investors make money, and – just as importantly – on helping them keep what they have. He also talks about the fund’s broad exposure to the Canadian bond market and his ‘no surprises’ approach because investors rarely like surprises when it comes to their fixed-income holdings. (Podcast recorded: Jan 11, 2019)
Christine: Hello, I’m Christine Wellenreiter, Vice-President of Marketing and Communications at GLC Asset Management Group. On today’s podcast, we’re going to bring you a recent interview that was recorded in January with GLC’s portfolio manager, Dale Haynes. Hear Dale speaking with Great-West Life’s Ashike Akbar on a featured series of podcasts about the London Life Pathways funds and specifically about the Portico Core Bond Fund Dale manages. We hope you enjoy it!
Ashike: Hi Everyone, this is Ashike Akbar, welcoming you to the fund manager podcasts brought to you by Wealth Sales Strategy and the marketing team. This is one in a series of 12 fund manager podcasts on the London Life Pathways funds. In today’s podcast we have with us Dale Haynes from GLC to talk about the Core Bond fund. Dale, thank you so much for being here with us today.
Can you tell us a bit about yourself, your past experiences?
Dale: Although I earned a degree in finance, I ended up in this industry from more of an accounting background, I can safely say that my academic and work experiences are quite diverse. Initially, I worked in various accounting roles for different manufacturing companies. Then I started at London Life in 1990, with the Investment accounting department. Within a year, I moved over to Asset Liability Management. This definitely gave me a solid footing in modelling multiple investment assets, as we worked on the capital budget and the 5- year investment plan. In the year 2000, I returned back to the predecessor of GLC as a corporate credit analyst, which is where I am today.
Ashike: You go far back with London Life. Dale: Yes, I do.
Ashike: Tell us a little about your team?
Dale: The Portico team is quite diverse—I don’t think any two of us have similar backgrounds, as to how we got here. And I think that this is what makes our team special, as we all have different perspectives and experiences. We have complimentary skill sets, and we’re not afraid to tap our GLC equity partners on the shoulder to ask for their opinion. Another perspective is always valuable.
Ashike: Tell us what a typical day for you looks like in the office?
Dale: A typical day for me starts out with a high-level view of the portfolio, to check if trades I had done the previous day are reflected properly, and are doing what I expected them to do. Then it is off to reading news headlines from various media outlets, such as Bloomberg, etc. to see what has happened overnight, and look for anything I might have missed from the day before. This is very important and something our team is always doing, as we are now a truly global economy, and our market is heavily influenced by foreign buyers and sellers. I also talk with various investment dealers to capture their spin on the latest news, trends they are seeing in the market, and to be honest, any speculation as to what the day may bring. Throw in some trading and portfolio positioning, along with research, and that rounds out a day.
Ashike: What would you identify from your investment philosophy and or process that you think is key in generating returns for our clients?
Dale: First and foremost, I am driven by fundamentals—my accounting background prepped me to be very comfortable with financial statements. However, this doesn’t give you the total picture, if I’m looking at a corporate bond for instance, nor does it tell you how the market will trade. So, this is where I start to apply a heavy overlay of behavioural finance or behavioural economics. I want to know why the issuer is bringing a bond to market, why they’d be doing it at that specific time. This can also be extended to why clients might deposit or withdraw money, for example. I’m oversimplifying a bit here, but that’s the high-level view.
My process is driven by being highly skeptical, and very pessimistic – but it follows a regimented check down pattern. Earlier I had mentioned that I had a diverse academic background– before university, I attended college to be a commercial airline pilot. One thing I took away from that education was that every flight has check lists – prior to start up, takeoff, in-flight, and landing. I have applied that knowledge and discipline to have checklists when I do my research on a bond issuer, when I buy the bond, and ultimately how long to hold on to that bond. Keep in mind that at the end of the day, a bond is a contract that will pay a stated stream of payments, unlike a common stock – people tend to fear bonds, perhaps because we have some confusing lingo, but I do believe that they are simple and don’t have to be complicated or scary.
So, I have a regimented process, but a relaxed chaos philosophy. In other words, sticking to a well-defined, proven process that can help add back a lot of clarity and control to an otherwise chaotic environment.
Ashike: Having left 2018 behind, what is your outlook for 2019?
Dale: I think that the beginning of 2019 will be challenging as a certain amount of price discovery will happen— corporate spreads were blown wider in late 2018, and without new primary issuance, the market needs to find the “right” level for spreads.
In 2019 will the portfolio will begin with a modest overweight in corporate credit, and a small underweight in provincial credit, until the noise begins to disappear—that noise being Brexit, Trump, China, European unrest. I think, when there is market noise, it’s best not to be reactive, but to simply wait, as there are players in the market betting on the direction noise takes us. It’s also important to note that this behavioural overlay is a key risk-mitigating factor.
Ashike: We are down to our final question. What is different between this core bond and all the other core bond funds in the market?
Dale: This core bond fund is different from other core-type funds because its dispersion of variances from the benchmark is small, and this is done by design—the fund tends to stray from duration target by only 60-90 days at most. It also tends to be overweight corporate credit, but in names that are high-quality and have liquidity. Really what I’m trying to show here is that with this fund, an investor will get broad exposure to the Canadian bond market, with no surprises. We tend to go through cycles where people forget that quality in bonds is important. That is, until times get tough—then that quality is all they care about. I’m focused on helping investors make some money, and, just as importantly, on helping them keep what they have.
Ashike: Thanks Dale, for all the valuable insights on this fund.
And folks, hope you enjoyed listening to Dale from GLC. Please tune in to the other podcasts to hear about all the great funds available through the London Life Pathways shelf and Constellation Managed Portfolios Program. Thank you
The commentary in this podcast represents the views of the speaker at the date of publication, and do not necessarily represent our views. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This commentary is intended as a general source of information and is not intended to be a solicitation to buy or sell specific investments, nor tax or legal advice. Before making any investment decision, prospective investors should carefully review the relevant offering documents and seek input from their advisor.
Why invest in this portfolio strategy?
Ideal for investors seeking a conservatively managed, highly diversified core fixed income portfolio that’s designed to be responsive to changes in interest rates and market risks, while controlling overall risk levels.
The Core Bond (Portico) portfolio strategy can offer:
- A purely Canadian bond portfolio that is highly diversified by sector, term and issuance
- A conservatively managed, high-quality portfolio of investment-grade fixed-income holdings
- Active management of credit risk, duration, yield curve and sector positioning to optimize yield opportunities while mitigating risk
- Active management of sector exposure to seek greater yield opportunities and manage risk
Data for institutional investors
Vice-President, Fixed Income
Dale is lead manager for the Portico Core Bond portfolio strategy, one of the largest Canadian bond segregated funds in Canada. As a senior portfolio manager within GLC’s fixed income division (Portico Investment Management), he also oversees some of Portico's sector-focused and specialized fixed income portfolios.
Dale began an investment career in 1990 that has included direct portfolio management responsibilities for active and passive fixed income strategies. Dale credits his deep fundamental and disciplined approach to corporate credit analysis to his varied experience early in his career, including accounting, asset liability management and a diverse educational background.
He holds a Chartered Investment Manager designation as well as an honours bachelor of business administration degree in finance from Brock University.
Benchmark source: Copyright®, FTSE is a trade mark of FTSE International Ltd and is used under license. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); and TSX® is a registered trademark of TSX. Copyright®, MSCI Inc.
Portfolio attributes and rates of return reflect the portfolio strategy used by the London Life segregated fund shelf.
Past performance is no guarantee of future results.
There is no guarantee that investment objectives, or risk or return targets discussed in this material will be achieved. No part of this material may be reproduced or redistributed in any form without express written permission of GLC Asset Management Group Ltd. The data provided is for information purposes only. This material is not intended to be read in isolation and may not provide a full explanation of all the topics that are presented and discussed. Information contained in this material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This material should not be considered a recommendation or offer to purchase or sell any particular investment.