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Analysis of your current portfolio
McLean Capital offers you a free assessment of your current investment portfolio. We will evaluate your portfolio on 3 aspects: historical performance, the actual fees you pay and the potential return for the future.
Here is a list of things that are important to know about the investment industry:
1. The vast majority of portfolios are essentially the same, regardless of the institution.
2. The majority of portfolios pay two layers of fees: one for the advisor and one for the mutual funds in which you are invested. The second layer of fees does not need to be disclosed in Canada.
3. Your advisor is probably a representative for their institution's products and not an investor-analyst.
4. Your portfolio is probably over-diversified. Mutual funds can hold between 100 and 1,000 securities. If you add up all the positions held by all these funds, can an advisor really track hundreds or thousands of different positions?
5. There are usually significant conflicts of interest plaguing the large institutions that dominate the investment industry.
6. If you see names like "Fidelity", "Franklin Templeton", "iShares" or "Vanguard" in the list of your investments, they are all American companies. A large part of the assets managed by large Quebec and Canadian institutions are entrusted to American and international companies.
7. Alternative funds are not really different from mutual funds. In both cases, they invest in similar assets. The difference: alternative funds cost clients more, are less transparent and generally come with exit penalties.
Historical performance
For many clients, it is difficult to understand the return they obtained over 5 or 10 years in an RRSP, TFSA or other. It's even more difficult for most clients to know how these returns compare to the average.
The first point we look at in our analysis of your portfolio is the performance obtained in the past and how it compares to the market and the best options available.
Actual fees
In Canada, institutions are not required to disclose fees charged by mutual funds on client statements. These fees are therefore never disclosed in portfolio statements. Yet they have a significant impact.
Most Canadian portfolios are invested in mutual funds.
Here are some examples :
Important | Client 1 | Client 2 | Client 3 |
|---|---|---|---|
Assets under management | $80,000 | $320,000 | $715,000 |
Number of funds | 12 | 12 | 12 |
Number of positions | 1,200 | 1,200 | 1,200 |
Advisor fees | 1.50% | 1.20% | 1.00% |
Indirect fees inside the funds | 1.75% | 1.25% | 1.00% |
Actual fees (annually) | 3.25% | 2.45% | 2.00% |
Actual fees in $ | $2,600 | $7,840 | $14,300 |
The return potential for the future
As explained above, the vast majority of portfolios are essentially the same, regardless of the institution. Your portfolio is probably also over-diversified.
This causes your portfolio to essentially make a sub-optimal return.
For example, in 2023, the average portfolio made between 7-11%. However, the American stock market returned 26% in 2023 and the Canadian stock market returned 11%.
Why the vast majority of portfolios are the same:
1. Large Canadian institutions manage on average $354B in assets under management. 5% of all the shares of Canadian Tire (for example) represents 0.1% of the average portfolio of these institutions. We begin to understand why they buy everything and can't be too selective.
Assets under management
RBC (2023): $1,068B
CPP (2023): $575B
TD (2023): $450B
CDPQ (2022): $420B
BMO (2023): $333B
Scotia (2023): $317B
CIBC (2023): $300B
IG (2023): $240B
Manuvie (2023): $235B
BNC (2023): $121B
IA (2023): $111B
Desjardins (2023): $82B
2. Your advisor is probably a representative for his institution's products and not an investor-analyst. So, don't think it's easy for your advisor to go in a direction away from the institution and others.
3. It is inherently difficult to do something different from others in investing. Doing like the average is very comforting and reassuring, even if it is possible to do much better when you put in the effort.
4. Conflicts of interest matter. When an institution issues stocks or bonds for a government or business client, it must sell those securities to someone else... as institutions have control over the assets of the majority of the Canadian population, it's no surprise that so many people had large allocations to 1% bonds between 2009 and 2022.
We can analyze your portfolio and give you an idea of future potential.
At McLean Capital, we integrate the proven principles of Warren Buffett into our wealth management approach to provide our clients with financial services that not only preserve, but also grow their wealth over the long term. Our services are designed for those looking to invest smartly and secure their financial future with wisdom and insight.
If you would like an Analysis of your current portfolio, please complete the form below: