Mr. Patton: AMI Partners is an institutional money manager with offices in Montreal, Toronto and Vancouver, Canada. We manage about 3 billion in assets. We have balanced fund mandates, Canadian equity speciality mandates and fixed income mandates. Canadian equities comprise about two-thirds of our assets under management. Within Canadian equities, we offer a core Canadian equity product with a value bias, a growing-income fund focused on stocks with growing dividends and a small-cap product. The core Canadian equity product's investment philosophy is to invest in undervalued companies with improving fundamentals that will be worth more tomorrow. Within fixed income, we offer universe, long bond, real return bond and corporate bond products. We offer an interesting U.S. multi-cap equity product that uses exchange-traded funds and outperforms the S&P 500 with little additional risk. Finally, we use JPMorgan to manage our non-North American equities.
TWST: Please discuss your asset allocation process and how you decide on the different allocations for different clients.
Mr. Gibson: Some years ago, when Canada removed the limitations on foreign investments for pension funds, we did a thorough review of the various asset classes. We concluded that Canada was and is a very attractive place to invest our clients' money. As a result, we set our strategic asset mix with a higher-than-average Canadian equity component. This has turned out to be a good decision because Canadian equities have outperformed both U.S. equities and non-North American equities over the past few years. On a shorter-term basis, we overweight and underweight asset classes depending on our capital market outlook. We continuously monitor economic data for Canada, the United States, the European Union, China and other major economies to ascertain where we are in the business cycle, and determine our capital market outlook. We test our conclusions with scenario analysis by asking questions, such as, "What will the outlook be if we have higher interest rates than we anticipate? And what economic events would cause interest rates to be higher?" These tests occasionally cause us to modify our capital market outlook, but they also enable us to react quickly if one of these alternative scenarios develops because we have thought about it.
Our balanced fund asset mix has consistently held a heavy weighting in Canadian equities. Our exposure has gone up and down, but it has consistently been higher than three-quarters of our Canadian competitors. This has proven to be a good strategy because Canadian equities have delivered strong returns, whereas U.S. and non-North American equity returns were penalized in Canadian dollar terms by the strong Canadian dollar. This strategy has been a significant contributor to our first-quartile balanced fund returns in each of the last seven years. Moreover, we continue to think Canadian equities will deliver strong performance going forward.
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