CC&L Group Income and Growth

Investment Objective

• Construct a portfolio of primarily income-oriented equity instruments and investment grade and non-investment grade bonds focused on maximizing the long-term total return while generating a portfolio yield in excess of that of the benchmark, 25% FTSE TMX Canada All Corporate Bond Index, 25% S&P/TSX Capped REIT Index and 50% S&P/TSX Composite Index
• Maintain total portfolio risk at a level similar to that of the benchmark

Highlights

• Diversified across three major income and growth oriented asset classes.
• Focused on adding value, mindful of capital preservation.
• Limited exposure to commodities to reduce volatility.
• Deep, stable team with long track record.

Investment Philosophy

• Macroeconomic themes influence markets over longer term.
• Opportunities exist when fundamentals vary from consensus expectations.
• All capitalization coverage maximizes breadth of opportunities.
• Multiple asset classes offer greater opportunities to add value and diversification.
• Price attractiveness and valuation are key.
• Risk management is integral component of process.

Investment Process

• Disciplined, conservative process: Investment process that strives to deliver protection of capital in “down” markets, good participation in “up” markets, and stable cash flows.
• Fundamental ranking system: Universe focused on yield-oriented securities ranked on key factors including financial and management strength, profitability, growth and price attractiveness.
• Independent bottom-up research: Combining fundamental equity research and credit analysis focused on sustainable, distributable cash flow, capital preservation and quality of  management.
• Management interviews: Confidence gauged through management interviews, on-site visits and discussions with customers and competitors.
• Strategic outlook: Each business evaluated in context of its industry and competitive environment.
• Target prices: Price targets established and reviewed weekly to ensure consistent application of buy and sell disciplines.
• Top-down overlay: Historical and current valuations and macroeconomic factors shape sector overweight or underweight decisions.

Portfolio Construction & Risk Management

• The portfolio generally holds fixed income securities along with dividend paying equities, REITs, income trusts, and preferred shares with superior total return prospects backstopped by a proven commitment to return capital to shareholders.
• Fundamental analysis assesses business risk, liquidity and valuation risk and sustainability of distributable cash flow.
• Fixed income securities including high yield bonds are used as a source of diversification, safety and yield.
• Risk management is part of the investment process, not an afterthought.
• Strict position limits on individual security weights