Frequently asked questions

What is a Portfolio Manager?

Coleford’s portfolio managers are independent and fully qualified professionals who are licensed to manage investment portfolios on a discretionary basis and advise clients. Portfolio management is a fee-for-service business. Fees are charged as a percentage of the asset value of each client’s account, thereby aligning the interests of both parties. These fees are our only source of revenue.

What’s the difference between what Coleford provides and what a financial advisor offers?

The term “financial advisor” is used to describe a number of investment intermediaries including retail stockbrokers and mutual fund and insurance representatives. The remuneration of many financial advisors is based on transaction commissions from selling a wide selection of financial products and services managed by others. Commission-based remuneration has been known to orient portfolios toward higher levels of investment churn, which do not necessary produce client value but always produce tax consequences. The educational credentials can also be dramatically different.

What is discretionary management?

During the beginning of your relationship with Coleford, and at regular following intervals, we will meet to discuss your investment objectives and long-term goals. With this information, a strategy will be put in place through an Investment Policy Statement (IPS) that will act as a guideline for the discretionary management of your account by Coleford. Individual investment decisions are then made by Coleford, including rebalancing when required to meet your stated objectives and risk tolerances. The advantage of discretionary management is that you maintain control through your IPS and we execute your strategy through attentive long-term management.

Knowing how my portfolio is performing is important to me. What sort of reporting system is in place at Coleford?

Our clients receive personal portfolio updates from Coleford quarterly showing net asset value, portfolio holdings and asset mix. In addition, clients receive monthly statements generated by a third party custodian (typically a large Canadian trust or brokerage firm). We also encourage formal portfolio reviews between our clients and their Coleford portfolio manager on a regular basis – and of course, we are available for consultations  upon request.

What’s involved in becoming a Coleford client?

Contact us and we’ll be happy to assist you.

How does Coleford add value?

Primarily by selecting and managing the right combination of high quality North American and globally focused international stocks and Canadian bonds, chosen to deliver long-term, tax efficient returns geared to the individual needs and objectives of each client. We do this by using our global experience, proven investment process and one-on-one wealth management consulting approach.

Coleford specializes in segregated portfolios. How do these differ from pooled funds?

With a segregated portfolio developed by Coleford, each client has a unique portfolio, designed and managed separately from other client accounts to achieve specific personal objectives.. Capital gains and losses are managed on a client-specific basis.

With pooled funds, the assets of many investors are pooled together and the individual owns fund units. Unlike segregated portfolios, pooled funds can result in unintended tax consequences. In addition, pooled funds cannot be customized to unique requirements.

So does that mean Coleford clients can restrict certain securities from their portfolios based on ethical or other considerations?

Absolutely; client portfolios can be constructed to screen out securities based on ethical, social and religious considerations.

Do you invest in foreign markets?

Yes. Coleford’s primary equity focus is on high-quality, blue-chip North American stocks. U.S. equities often comprise close to 50% of total equities, with emphasis on U.S. based multinationals. On average, U.S. corporations have demonstrated a higher profitability level than any other country when measured on a return-on-equity basis. We believe that U.S. multinationals provide an effective and lower-risk investment vehicle for obtaining international diversification. The companies we select are usually international leaders in their markets, are always financially strong and adhere to rigorous financial reporting and disclosure standards. We also invest in selected non-North American companies through American Depository Receipts.

Will Coleford provide references?

Yes, but since our client relationships are private and highly confidential, we will only provide references once a potential client is serious about engaging Coleford.

What is Coleford’s rate of portfolio turnover and how does it affect a taxable client?

Coleford’s typical portfolio turnover has been very low, averaging less than 15% per annum. As background, portfolio turnover measures the percentage of the portfolio’s equity securities that is sold and replaced with other securities. Over the long term, low portfolio turnover provides tax benefits because fewer taxable capital gains are generated. High portfolio turnover that is associated with some actively traded portfolios results in the generation of higher taxable capital gains and higher transaction costs. High portfolio turnover does not necessarily enhance portfolio performance but does significantly increase costs.

Coleford uses a custodian. What role does a custodian play?

As is common practice for all portfolio managers, Coleford has a number of custodial relationships with many of Canada’s leading trust and brokerage firms. As the word implies, the custodian holds the securities in safekeeping and has the specialized resources to offer this service. The custodian, does not, however, have any authority to make day-to-day investment decisions. These decisions are the responsibility of the portfolio managers at Coleford.

What is an accredited investor?

Generally speaking accredited investors include investor’s resident to Canada who have a certain minimum income or financial asset level. In order for an individual to qualify as an accredited investor, he or she must accomplish at least one of the following:

  1. earn an individual income of more than $200,000 per year, or a joint income of $300,000, in each of the last two years and expect to reasonably maintain the same level of income.
  2. have a net worth exceeding $1 million, either individually or jointly with his or her spouse.