Aligned Capital Partners Inc.

Overview

My Approaches & Beliefs:

Aligned Capital Partners Inc. is securities licensed, allowing me to access a wider range of investments and financial products than banks or mutual fund dealers.

• Risk is the possibility of real loss of capital and not just volatility
• You should understand more so you are not dependent on anyone
• I need to know you to help you manage your cash flow

Objectives of Investing

• Balance your need for growth, future cash and minimizing volatility
• Cash Management- stable, liquid investments to provide cash for your expected cash requirements for the next two to five years
• Long Term Growth- achieve pleasing long term growth and minimize volatility
• Tax efficient structure

What I consider when choosing an Investment

Here are some of the things that I look for when selecting a investment.

Structural Attributes of Fund Company:

Who actually owns the mutual fund management company is important.  A management company that wants to maximize their profits may clash with their fund managers and performance of their funds.

1. Manager Must be Experienced – You are buying professional money management when you put your money in a fund. Make sure the manager is among the best. Funds managed by experienced fund managers outperform by 1.5% per quarter. (Source: The value of experience for mutual fund managers white paper by Kempf, Manconi, Spalt, 2013)    I have a belief that managers should be bald or grey!  This is a competitive industry and managers get fired if their numbers are no good. Old managers have managed to make the cut for long periods of time.
2. Company must be “investment lead” and not lead by marketing or shareholders of the fund company.
3. Privately held – employee owned firms can balance the needs of the investor with the demands of the shareholders
4. Size matters – Big funds are too difficult to manage–  A fund’s performance is inversely correlated with assets under management. (Source: Does fund size erode mutual fund performance white paper by Chen, Hong, Huang and Kubik.)  This means funds can get too big to manage.
5. Managers must have their money in their funds – Co-Investment – Managers who have $1 million in the funds they manage outperform the majority of their peers over a five-year time frame. (Source: Morningstar Research Inc. and US Securities and Exchange Commission)

Investment Approach Attributes

1. Hold Fewer Companies – Fund managers that concentrate their holdings in their best ideas outperform the market by 4% to 10% annually (Source: “Best Ideas” white paper by Randolph Cohen, Christopher Polk and Bernhard Silli).
2. Diversify portfolio by idea – not every investment idea works out.  Having too much riding on one idea can result in a big loss.
3. Managers have to be Active – Fund managers with the highest active share outperformed their index by 3.64% annually. (Source: The Mutual Fund Industry Worldwide white paper by Cremers, Ferreira, Matos, Starks April 2011)  This means that funds whose holdings do not overlap the index do better.
4. Low Turnover – manager that does not change investments often does well.  Industry average holding period is only 1.4 years!
5. Fees – Lower MER & TER expenses help the manager outperform.
6. Bottom up stock selection based on fundamental analysis is better.   Managers should focus on investing and not on market timing or computer algorithms,

WHO do you choose?

• All Mutual funds have someone making the final buy/sell decisions. Therefore there is a “Who” decision.
  • Knowing that the decision maker has a good “track record” is important
  • A bank or investment company is not the person making the buy/sell decisions.