Emily Hofmann interview

Meet Emily Hofmann

Emily Hofmann is a Portfolio Manager at Alitis Investment Counsel who excels at problem solving. She loves boating, too!

Todd Blaseckie

Meet Todd Blaseckie

Todd is a Portfolio Manager at Alitis Investment Counsel with over 20 years’ experience in the financial services industry.

Meet Aaron Robertson

Aaron started his career in finance and investment in 2011, but the seed was planted when his parents bought him his first stocks as a teenager.

Stock screens - Financial Analyst featured

What is a Chartered Financial Analyst?

The Chartered Financial Analyst designation, or CFA, is one of the most highly regarded global certifications in the financial services industry. Candidates are tested on their understanding of portfolio management, investment analysis, economics, derivatives, accounting, corporate finance, statistics, and ethics, in order to verify their proficiency and integrity before earning this designation.

CFA Logo

The path to attaining the CFA designation is rigorous and includes having to write three notoriously intensive exams, each being 6 hours long. Before qualifying for enrollment in the CFA program, candidates must hold either a bachelor’s degree or have 4000 hours of professional work experience. To be able to use the CFA designation, one must pass the three levels of the CFA program and obtain at least 4000 hours of relevant experience in the financial industry. CFA Charterholders are expected to uphold the Code of Ethics and share in the Institute’s Visions and Values for the duration of their career.

We decided to ask all our staff who have the Chartered Financial Analyst designation (and one on his way) why they chose to pursue the designation. Read on to find out more about each of their paths to obtaining the CFA designation, the hard work and dedication involved with achieving this goal, and how working with a CFA Charterholder can provide you with confidence and extra financial peace of mind.

Todd Blaseckie, CFA

Portfolio Manager
CFA Charter granted in 2014

I have always been interested in investments and the investment industry. I started my investing journey at the ripe old age of 16 and have not looked back since.

Working from home - sunset

When I decided that I would make ‘investing’ a career, I did not know even where to start. My parents had always highlighted the importance of education, so I knew education was going to be critical in giving myself a good chance to be successful in this career. I also knew that with all the educational tools (and later experience) my clients and their investments would be better off.

Getting a degree was the first step, then being able to help clients with retirement planning and other financial decisions would be next (Certified Financial Planner – CFP®) and finally after a few years in the industry, I came to realize that if I wanted to distinguish myself from the crowd and really build on my knowledge and experience the CFA charter was the way to go.

My decision to enroll in the CFA program was not taken lightly. It’s not easy and it’s not quick. I had to be sure that my wife was on board with the plan as we had a young child, and I was not going to be very available for 3-6 months per year for 3 years (The CFA has 3 levels and tests). As a family, we committed to the program, and I am glad that we did. The knowledge and skills that I gained in getting the CFA charter have proved invaluable. Not only does it separate me (and Alitis) from other investment managers (brokers, fund advisers, investment planners etc.) but it allows me to provide the additional knowledge and insight, when combined with my experience, to better the process, the investment, the client experience, and Alitis Investment Counsel in general.

As I think about what Alitis brings to our clients, I find that I sometimes minimize the experience and education that this firm brings to bear. Alitis Investment Counsel employees are highly motivated, very education-oriented and client-focused people. We do good work for our clients, and I think we should all be proud.

Thomas Nowak, CFA

Portfolio Manager
CFA Charter granted in 2021

The CFA Charter provides the tools to be good at what we do: managing money. Investing is a daunting task. There are seemingly endless options of what to invest in, there are salespeople & news/media constantly bombarding you with “the next great thing/Tesla/Apple/Bitcoin”, and the stakes are high: we take it very seriously that Alitis is entrusted to manage your hard-earned money. Having completed the rigorous studies of the CFA Program, as well as the required work experience, I have the confidence to make decisions in the best interest of our clients.

Mitchell Prothman, CFA

Portfolio Manager
CFA Charter granted in 2011

I decided to enroll in the CFA program in 2008 in order to better serve my clients and differentiate myself from other local financial professionals. After over 900+ hours of study and 4,000 hours of qualified work experience, I became a CFA Charterholder in 2011. Successful completion of the program required a comprehensive understanding of 10 broad topic areas including Portfolio Management, Ethical and Professional Standards, Economics and Alternative Investments. Additionally, maintaining the integrity of the capital markets is paramount.

Beep Blarp Boop

In order to maintain in good standing with the CFA Institute, every year I must attest that I have and will continue to adhere to the CFA’s Code of Ethics and Standard of Professional Conduct (“Code and Standards”).

Although my role within Alitis has changed over the past 11 years, the designation continues to provide meaningful benefits. Not only do I utilize the knowledge gained from the program in managing the Alitis Private REIT, Real Estate LP and Private Mortgage Fund, but the designation provides instant respect and credibility amongst industry professionals. Whether it is talking to CEOs of large private and public companies, other portfolio managers or industry affiliates, the CFA Designation gives me the confidence I need to succeed.

Harrison Brown

Wealth Service Coordinator
Completed Level III of the CFA Program

I was looking for a program and designation that would give me a strong skill set in finance. I wanted something that was difficult to achieve and held with high regard within the industry as a standard both technically and ethically. That is when I discovered the CFA Program.

Before I enrolled in the CFA Program, I attended an informational seminar. During that seminar, I was informed only 20% of the people that enroll for the Level 1 Exam go on to finish all three levels of the program and obtain their CFA Charter.

This, coupled with a focus on ethics and a wide range of financial topics covered, told me that this was the program for me. Having now passed the three levels of the CFA Program and working towards earning my charter, I can confidently say that the program has given me a wealth of knowledge and background that I am able to draw on when talking with our clients. In addition to the skillset, the ethical standards that a CFA Program Member or Candidate abide by are rigorous. The CFA Institute, through the Code of Ethics and Standards of Professional Conduct, have their members adhere to the highest standards, often higher than local law or regulatory bodies. I am proud to be held to these standards as I believe it is in the best interests of our clients, our company, and the greater financial markets.

Kevin Kirkwood, CFA

President, Chief Investment Officer,
and Chief Compliance Officer
CFA Charter granted in 1996

Quite honestly, I did not know much about the CFA program when I first signed up in January 1994. A friend of mine in Toronto suggested I take the course as a way to get my mind off my brother who died suddenly 8 months earlier. I was rather depressed, but the course load forced me to focus on the future as opposed to dwelling on the past. My brother would have wanted that. I had completed an MBA before I started the CFA program and was amazed at how much more difficult, in-depth, and relevant it was compared to what I had experienced in university.

Simply passing the three levels of the CFA program does not mean that’s it. Rather, the CFA program prepares you for lifelong learning and skills improvement that continues throughout one’s career. I find it reassuring that as much as the world and the investment landscape have changed, much of what I learned 25 years ago in the CFA program is still relevant today. A good deal of how Alitis has been set up reflects the CFA program and the resulting lessons learned over the years.

 

Ready to get in touch with one of our CFAs to explore your investment options?

 


Disclaimer and Disclosures – Alitis Investment Counsel Inc. (“Alitis”)

This article is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities discussed herein to anyone in any jurisdiction where such offer or solicitation would be prohibited.

Opinions expressed in this article should not be relied upon as investment advice. This article does not take into account the investment objectives, risk tolerance, financial situation or specific needs of any particular person. Each person’s investment objectives, risk tolerance, financial situation and specific needs should be evaluated before making any investment decision. This article may contain economic analysis and opinions, including future economic and financial markets performance. These are based on certain assumptions and other factors and are subject to inherent risks and uncertainties. The actual outcome may be materially different. All opinions expressed herein constitute judgements as of the date of this article and are subject to change without notice.

Unless otherwise noted, the indicated rates of return are the historical annual compounded returns for the period indicated, including changes in security value and the reinvestment of all distributions and do not take into account income taxes payable by any security holder that would have reduced returns. The investments are not guaranteed; their values change frequently, and past performance may not be repeated.

Unless otherwise noted, risk refers to the annualized standard deviation of returns for the period indicated.

The information contained in this article has been drawn from sources believed to be reliable but is not guaranteed to be accurate or complete. Alitis assumes no duty to update any information or opinion contained in this article.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

© 2022 Alitis Investment Counsel Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure, in whole or in part, or in any form or manner, without the prior written permission of Alitis is prohibited by law.

Understanding Your Tax Slips

Like most income earned in Canada, most investment income and capital gains on investments are taxable. The tax payable on investments varies by the type of investment and the type of account the investment is held in. This article provides a high-level summary of the more common tax slips, income tax reporting requirements and some planning tips.

Common Tax Slips for Investment Accounts

Registered Plans

Tax Slip Description  Target Mailing Date
RRSP Contribution Receipts

(March 2, 2021 to December 31, 2021

Shows personal and spousal contributions made to an RRSP Late January 2022
RRSP Contribution Receipts

(January 1, 2022 to March 1, 2022)

Shows personal and spousal contributions made to an RRSP Late March 2022
T4RSP RRSP withdrawal Mid – February 2022
T4RIF RRIF or LIF withdrawal Mid – February 2022
T4A RESP withdrawal Mid – February 2022
Note: TFSAs are not taxable thus no tax slips are issued

Non-registered Accounts

Tax Slip Description Target Mailing Date
T5 Shows interest and dividends earned on holdings during the past year. End of February 2022
T3 Shows income allocated during the past year from Trust Units. End of March 2022
T5013 Shows income or losses reportable during the past year from Limited Partnership Units End of March 2022
T5008 Shows redemption proceeds for investments or sold to assist with calculating capital gains/losses during the past year. End of February 2022

Registered Retirement Savings Plans (RRSPs)

We can describe RRSPs as being both tax sheltered and tax deferred. You can deduct your RRSP contributions from your earned income each year until the year that you turn 71 (or if your spouse is younger than you, the year they turn 71 if you are contributing to a spousal RRSP). The money earned on your RRSP investments is not taxed while it stays in the plan. RRSPs do not generate any tax slips related to annual investment earnings, rather slips are issued for any contributions and withdrawals. You will receive a RRSP Contribution Receipt for any contributions made in the prior year contribution period, allowing the full amount to be deducted from your taxable income up to your available deduction limit. For contributions made in the first 60 days of the following year, you will receive a separate RRSP Contribution Receipt for each contribution. Any withdrawals are fully taxed as income. You will receive a T4RSP for the exact amount withdrawn from an RRSP. If you do not contribute to or make a withdrawal from an RRSP during the year you will not receive a slip.

Registered Retirement Income Funds (RRIFs)

A RRIF is essentially a continuation of an RRSP as in most cases you just keep the same investments you had in your RRSP and simply transfer them. The difference is you may not make any new tax-deductible contributions to a RRIF and you must receive at least a minimum amount from your RRIF beginning the year after you open it. Like RRSPs, RRIFs are tax sheltered and tax deferred. While you do not pay tax on the annual investment earnings in your RRIF, the full amount of any RRIF withdrawals are reported as taxable income on a T4RIF. Once you convert your RRSP to a RRIF, you can expect to receive an annual T4RIF.

Tax Free Savings Accounts (TFSAs)

Relatively new as a type of account, TFSAs started in 2009 and provide Canadians with a variety of financial planning and income tax benefits. The important thing to remember about TFSAs is that you will not receive a tax slip for this account. However, you should be careful not to overcontribute as that can result in expensive penalties. It doesn’t matter if you contribute, withdraw, earn 15% or lose 20%, the investment earnings (or losses) in your TFSA are not taxable.

Non-Registered Accounts

Sometimes referred to as an Open or a Cash account, this is a regular investment account. It doesn’t have any special income tax deferral benefits. Unlike RRSPs, RRIFs, and TFSAs, Cash accounts can be held in joint names. This allows the taxable income to be split among the account owners generally according to the amount they have contributed to the account. There are a variety of tax slips generated by Cash accounts with the T5008, T5013, T3 and T5 being the most common.  The T5008 or “Statement of Securities Transactions” lists every sale or disposition of investments that occurred in the year. You use the T5008 to report the capital gains (or losses) triggered by those transactions, sometimes there will be an accompanying gain/loss report with a T5008. T5008s are only issued if there are dispositions to report. T5013s are issued for limited partnership investments. T3s and T5s report income from various funds, pools, trusts, GICs, stocks and bonds. Mutual funds can generate T3s or T5s depending on their structure. The Alitis pools (other than the Alitis Private Real Estate Limited Partnership) generate T3s. “Unrealized” growth in the pools such as an increase in the value of investments that have not been sold, is not taxable, thus only part of the total return of your investment account is reported on these slips. Tax slips for non-registered accounts do not report your investment return for the year, they only show the taxable portion of it. Because of the timing of transactions and your ownership in the pool during the year, it is possible to have income reported on a tax slip when there was a negative total return for the year.

Registered Education Savings Plans (RESPs)

RESPs are also tax sheltered and tax deferred. However, there is no deduction available for contributing to a RESP, so they do not have contribution receipts. A T4A is generated when withdrawals are made from the account. This tax slip reports the accumulated investment growth and the government grant money that is paid out in each withdrawal. Both the grants and the growth are taxable to the RESP beneficiary (the student). This generally works to the family’s advantage as their child, now a student in post-secondary school, is likely to be in a low to nil tax bracket when they make their withdrawals.

Do you have other questions about your 2021 tax return? Connect with us today

 

Disclaimers and Disclosures – Alitis Investment Counsel Inc. (“Alitis”)

This article is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities discussed herein to anyone in any jurisdiction where such offer or solicitation would be prohibited.

The information contained in this article has been drawn from sources believed to be reliable but is not guaranteed to be accurate or complete. Alitis assumes no duty to update any information or opinion contained in this article.

Alitis Investment Counsel Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before finalizing your tax returns.

© 2022 Alitis Investment Counsel Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure, in whole or in part, or in any form or manner, without the prior written permission of Alitis is prohibited by law.

Meet Apurva Parashar

Apurva brings more than 14 years of experience in the areas of Investment Management, Financial Services, Corporate Finance and Management Consulting.

She completed her Master of Business Administration (MBA) in Corporate Finance and Strategic Consulting from Schulich School of Business, York University, Ontario in 2012 and is a CAIA & CIM charter holder.

Apurva was also a National Level swimmer and has a Bachelor’s in Music from three different universities. In addition to English, Apurva can also speak Hindi, Punjabi, Gujarati and Marathi.

What is your superpower?

I would say I help people’s financial goals come true.

Why should someone choose Alitis?

One of the big reasons I would recommend people choose Alitis as a firm is we’re in the business of trying to do what’s right for you, what’s right for our client and that is really reflective in the client retention rate that Alitis has because Alitis has a client retention rate of over 99%; and that truly speaks to the level of trust that our clients have – most of our referrals are from existing clients who recommend their good experiences to their extended family and friends.

What do you love about your job at Alitis?

The fact that we are able to really make a meaningful positive impact in the life of our clients, the second and most important also is I am able to work with the great team because when you spend 40, 50, 60, hours a week you want to be doing a job that you really enjoy and with the people that you really enjoy and Alitis is able to provide that and that just helps make work more fun.

When you aren’t working, what do you do for fun?

Both me and my husband are avid hikers so we live in this glorious place with Strathcona Provincial Park being close to us, Gold River hiking spots being close to us so we try to get out for a lot of hikes in the summer and fall, I would say averaging between 15 to 25 hikes each year. I also enjoy getting out on the water with some kayaking activities and when I am at home I love reading, so reading is a guilty pleasure for me as well as doing a little bit of gardening.

Why do you work at Alitis?

It’s almost an extended family environment, it’s not just cut and dry professional relationship: “Here you go, I’ve made you some money, your investment reports are good, you’re out the door” We really genuinely connect with our clients, whether its in term of  helping them with a financial plan that they have, whether its in terms of helping them if they are dealing with the loss of a loved one, it’s a very very community and family-oriented environment and that is what genuinely spoke to me.

What is the most satisfying part of your job?

I’ve never felt like an outsider here, whether its with my clients or whether its my teammates. I’ve never discounted because I look different or maybe I have an accent. I’m always considered a part of the team and my input is just as valuable as somebody else’s. That genuinely makes me feel very confident and very at peace with working for a firm that really values that culture.

Connect with Apurva

  • Alitis' minimum is $250,000 of investable assets per household.

 

Disclaimers and Disclosures – Alitis Investment Counsel Inc. (“Alitis”)

This video is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities discussed herein to anyone in any jurisdiction where such offer or solicitation would be prohibited.

Opinions expressed in this video should not be relied upon as investment advice. This video does not take into account the investment objectives, risk tolerance, financial situation or specific needs of any particular person. Each person’s investment objectives, risk tolerance, financial situation and specific needs should be evaluated before making any investment decision. This video may contain economic analysis and opinions, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. All opinions expressed herein constitute judgements as of the date of this video and are subject to change without notice.

Unless otherwise noted, the indicated rates of return are the historical annual compounded returns for the period indicated, including changes in security value and the reinvestment of all distributions and do not take into account income taxes payable by any securityholder that would have reduced returns. The investments are not guaranteed; their values change frequently and past performance may not be repeated.  Unless otherwise noted, risk refers to the annualized standard deviation of returns for the period indicated.

The information contained in this video has been drawn from sources believed to be reliable but is not guaranteed to be accurate or complete. Alitis assumes no duty to update any information or opinion contained in this video.

© 2022 Alitis Investment Counsel Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure, in whole or in part, or in any form or manner, without the prior written permission of Alitis is prohibited by law.

Retirement Vs Skydiving

Retirement Planning Vs Skydiving: 3 Ways to Secure Your Future

At first glance, you might think retirement planning and skydiving are completely different. With retirement, you leave work and kick up your heels. With skydiving, you jump out of a plane. They’re completely different – right?

Actually, retirement planning and skydiving have more in common than you may realize. They both require planning, a degree of risk and a very deep breath.

Done right, retirement planning and skydiving are both life affirming and can greatly enhance your quality of life. Done wrong, and that’s where things can get messy.

What Retirement Planning and Felix Baumgartner Have in Common

On October 14th, 2012, Redbull athlete and professional daredevil Felix Baumgartner woke up in the morning and ascended to space in a helium balloon. It took him two and a half hours to reach his well-planned altitude of 38,970 metres.

Then, in a move that redefines ‘taking a deep breath’, that’s exactly what he did – and then he jumped.

You can imagine what happened next. Baumgartner fell for about four and a half minutes (that’s a lot of falling!) and reached a maximum speed of 844 miles per hour before he finally pulled his parachute for the remainder of his jump.

All told, Baumgartner fell for 9 minutes. Yet, while that’s just a blip of time in a 24 hour day, what the world did not see just how much time ‘Fearless Felix’ and his put in to plan the jump – seven years, from envisioning the idea, to creating the team and doing the physical and psychological training he would need to take that historic leap.

Now, let’s talk about you…

If you want luxury in retirement, you’ll need to plan for it. The sooner you start, the better!

Retirement Planning is Your Turn to Jump

You’re probably not going to jump from the stratosphere any time soon (although, coincidentally, a 60 year-old Google executive named Alan Eustace beat Felix’s record just two years later, so you never know!). Still, retirement is a jump of its own. And just like jumping from space needs plenty of planning from start to finish, the same principles need to be on the table when you plan your ‘jump’ from the work world to whatever comes next.

At Alitis, our job is to help you do that. We help you plan, from the moment you start thinking about retirement, to the strategy, maintenance, and behind-the-scenes work, right up until that day when you clock out for the last time.

There’s a lot that needs to go into that to ensure your landing will be a smooth one. With that in mind, let’s talk about three essential steps you should take during this important stage in your life.

Step 1 – Have a Plan With the End Goal in Mind

With Felix Baumgartner, the goal was to jump from 38,970 metres so he could set the record for the highest skydive of all time.

That was his number. You’ll need one too – although it will be in time and dollars rather than metres.

This plan may be more complex than you might think. You’ll need to factor in your post-retirement goals, government or company pensions, CPP, OAS, investments, cash flow, your net worth and a variety of factors you can’t leave to chance.

It’s your retirement. Plan to get it right.

Your retirement team can help you understand the markets and find the right investments to secure your future.

Step 2 – Build a World-Class Team

You don’t jump from space without a world-class team, and possibly a rocket scientist or two. It’s the same with retirement planning. It’s a big leap to leave the work force and that steady source of income.

When you do retirement planning, you talk to people – lots of them. And you need a team of qualified financial professionals to help guide you through the labyrinth of factors you will inevitably need to address as you start your journey to your pivotal final day at work.

Felix had a ‘Technical Director’. You’ll need a qualified ‘Financial Advisor’. And that person may add to your team, with wealth managers, accountants, lawyers and insurance advisors, in varying capacities.

Your Financial Advisor essentially acts as your Chief Financial Officer – they’re right there with you each step of the way.

Step 3 – Mentally Prepare Yourself

It takes more than a pep talk to jump from 38,970 metres. It takes years of physical and psychological training – and while you likely won’t need a team of psychologists to make your jump, retirement is a leap of its own.

After all, you’ve worked most of your life. Now you’ve got a little, well a lot of, free time on your hands. Are you going to sit at home and watch reruns of Gilligan’s Island all day? Or are you going to travel, volunteer, take courses, fitness classes, learn new skills, spend more time with family and/or all of the above?

There is no wrong answer to that question (12 hours a day of Gilligan’s Island? Sign us up!). It’s simply something you need to think about in each stage of your retirement planning.

Retirement isn’t just about numbers. At Alitis, we get that – and we’re here to help with as much mental preparation as we do with numbers.

Alitis Can Help With Your Retirement Planning

Our job at Alitis is to help with your jump. Among many other things, we’ve helped a wide variety of folks with retirement planning, from creating the ‘End Goal’ to Team-Building and Mental Preparation it takes to make this important transition we all need to address.

There’s a lot to consider with retirement planning. So do it right. Feel free to reach out to any of us on the Alitis team to learn more about how to plan for retirement and the many factors that go in to this big jump.

You can also reach out to us on LinkedIn and Facebook. We’re here to help – and we’re not hard to find!

Until next time.

 

 

 

Diversification Works When Done Correctly

At Alitis, we spend a lot of time reading and learning about the financial markets. We stay up-to-date on current events, we constantly monitor our positions, and we are always keeping an eye out for new investments that could improve our portfolios and their diversification.

That being said, we do understand that the financial marketplace can be a complex and confusing place, and there are some common pitfalls that we need to be mindful of. One of those pitfalls is called naive diversification.

Naive Diversification

Naive diversification occurs when someone has bought many different investments that they incorrectly believe to have the benefits of having either a low or negative correlation. They hope that they are protected from having large losses across their portfolio at the same time, but unfortunately, they are not.

An example would be someone that has “diversified” their portfolio by buying all the bank stocks in Canada. This is better than putting all of one’s money into only one bank stock, but there are plenty of factors that would affect all Canadian bank stocks at the same time. The same could be true of a portfolio containing all stocks in the world, as stock markets globally have similar exposures and are highly connected.

Imagine having a closet full of different shoes, but they are all high heels. You have hundreds of pairs of high heels, full of colourful designs, patterns and fabrics, but only high heels. If we asked you, “Do you have many pairs of shoes?” your reply would be, “Of course! I have hundreds of pairs!”

We would think that you must be well-prepared for all occasions with so many shoes. However, the next time you go to buy groceries after it snows, or you go to mow the lawn, or you go on vacation to Europe and have to walk down a cobblestone street, you may be surprisingly ill-equipped.

Our Approach to Diversification

At Alitis, we take a great deal of time and effort to ensure that your portfolios are both well-dressed and well-suited for a variety of market conditions. We select investments with purpose and keep in mind how new investments will complement the rest of the portfolio. After all, how your entire portfolio performs is more important to us than any single investment.

We look to create meaningful diversification across many asset classes and markets with the goal of providing a stronger risk-adjusted return than our benchmarks. And we are proud of that.

Real Estate Investments in Victoria

Real estate has been a core asset of the world’s wealthiest families and largest institutions since the beginning of time. Real estate houses the world’s businesses and provides shelter for the broader population. The appeal of real estate is based on the characteristics of the investment returns. There are three main sources of return from real estate: net rental income, debt reduction (as the mortgage is paid down), and growth in value as rental income and property values increase over time. Real estate tends to be a very stable asset class that delivers reliable rental income and tax-efficient long-term growth.

In 2018, average rents in the Victoria Census Metropolitan Area (CMA) increased 7.5% while the purpose-built rental apartment vacancy rates edged up to 1.2% from 0.7% in 2017 as the supply of rental units (construction completions) outpaced the increase in the demand for rental units. According to the 2016 Census and the 2011 National Household Survey, between 2011 and 2016, Victoria CMA added 9,340 households and of these household four of every five chose to rent instead of buy. A combination of stable employment prospects among younger age groups (who tend to be renters), the persistent gap between the cost of homeownership and renting, and population growth is expected to generate sustained demand for rental housing, resulting in below average long-term vacancy rates. Market demand, low financial costs in the current interest rate environment and favorable development policies for purpose-built rentals are supporting the construction of an expanded and updated rental stock in the Victoria CMA. (Source: “Housing Marketing Information.” Rental Market Report: Victoria CMA, Canada Mortgage and Housing Corporation, Fall 2018.) For these reasons, Alitis views the Greater Victoria area as a stable market.

Alitis is actively investing in the local market through partnerships with experienced developers and has projects that are in different stages of development including pre-construction (zoning or permitting), under construction, and buildings that are now completed and income producing.

Here are our current investments in the Victoria area:

The Enclave

The Enclave - Langford, BC

Developer: Ironclad Developments | Location: Langford, BC | Type: 81 Unit Apartment Development | Completed: February 2018 Held in the Alitis Income & Growth Pool, Alitis Growth Pool & Alitis Private REIT

Meaford Heights

Developer: Ironclad Developments | Location: Langford, BC | Type: 106 Unit Apartment Development | Completed: March 2019 | Held in the Alitis Income & Growth Pool, Alitis Growth Pool, Alitis Private REIT & Alitis Private Real Estate Limited Partnership

Belmont Landing

Developer: Stride Properties | Location: Colwood, BC | Type: 48 Unit Apartment Development | Estimated Completion: July 2020 | Held in the Alitis Income & Growth Pool, Alitis Growth Pool & Alitis Private REIT  & Alitis Real Estate Limited Partnership

Hedstrom House

Developer: Ironclad Developments| Location: Langford, BC | Type: 119 Unit Apartment Development | Estimated Completion: June 2020 | Held in the Alitis Income & Growth Pool

To learn more, please contact info@alitis.ca or call 250-386-4933.

Recent Returns in the Markets

As you have likely seen in the financial news, the equity markets experienced a sharp pullback starting in late September. The largest market in the world, the US stock market, dropped by almost 10% from its recent peak on September 20th to its recent low on October 29th. Market corrections have historically been a blip and recoveries have always eventually occurred. In the current case, markets are already showing signs of a recovery, with the US market up over 6.5% from its recent low as shown in the table below.

Recent Returns in the Markets

Market Index Asset Class Returns
Sep 20 to Oct 29 Oct 29 to Nov 7
FTSE TMX Canada Universe Bond Index (C$)1 Canadian Bonds +0.15% -0.64%
FTSE World Broad Investment Grade (US$)2 World Bonds -1.24% -0.13%
S&P/TSX Capped Composite Index (C$)3 Canadian Stocks -8.91% +4.46%
S&P 500 Index (US$)1 US Stocks -9.76% +6.57%
MSCI World Index (US$)4 World Stocks -9.84% +5.54%

Sources: 1. Blackrock, 2. FTSE Yieldbook, 3. TMX, 4. MSCI

Nobody likes to see drops of the magnitude we saw after September 20th, but this type of market environment is the reason Alitis started our business and our funds. Markets rise and fall and the volatility of the markets brings risk, but our mission is to manage volatility and deliver solid, longer-term returns while providing a more stable ride in achieving them. These types of conditions, and the slower-moving ones we have seen over the last few years, allow Alitis to fulfill this mandate. As well, it also showcases why the enhanced diversification of the Alitis approach benefits you.

The most obvious observation from the table above is that bonds did quite well during this downturn. World bonds actually made money in Canadian dollar terms as that index is quoted in US dollars and the Canadian dollar dropped during the downturn. From an investment perspective, we have underweighted bonds for some time simply because they have not offered much upside return. However, they almost always have a place in a portfolio as they will usually make a little money when stock markets experience the jitters. And this is exactly what happened here; they did their job perfectly and acted as a counterbalance to stocks.

That is not to say that bonds are your only option for diversification! At Alitis, we use many other asset classes and strategies to provide further diversification and to provide greater growth potential. Below is the approximate asset allocation of all the Alitis Investments, which illustrates the much broader diversification that we use when managing your investments:

Approximate Asset Allocation of the Alitis Investments

Fund Cash Bonds Mortgages Stocks Real Estate Other Alternatives
Alitis Strategic Income Pool 5% 46% 19% 4% 2% 24%
Alitis Income & Growth Pool 1% 25% 15% 31% 18% 10%
Alitis Growth Pool 0% 0% 7% 49% 37% 7%
Alitis Mortgage Plus Fund 0% 0% 86% 0% 0% 14%
Alitis Private REIT 11% 0% 0% 0% 89% 0%
Alitis Private Real Estate LP 1% 0% 0% 0% 99% 0%

Allocation information as of October 26, 2018

What the table shows is that stock and bond markets had essentially no impact on the Alitis Mortgage Plus Fund, the Alitis Private REIT, and the Alitis Private Real Estate LP as their investments were primarily exposed to other markets and types of investments. As for our three diversified investments, Alitis Strategic Income Pool, Alitis Income & Growth Pool, and Alitis Growth Pool, stocks and bonds make up less than half the assets. As such, the ups and downs of these markets will likely have less than half the impact on each of these investments, which is about what was experienced.

We have underweighted stocks and bonds in the Alitis Investments for quite a few years now as it was our view that these asset classes were overvalued. However, overvaluation can continue for quite a long time so not investing in an asset class can also lead to problems. This is why we usually under-weight asset classes rather than eliminating them entirely.  In the case of bonds, the market peaked a few years ago and this asset class has generated no return for over two years. Our decision to underweight bonds and increase exposure to mortgages and other alternatives has been well-rewarded. On the other hand, stocks continued to rise over the last few years so our move to real estate and other alternatives, while still very profitable, has not been as well-rewarded.

So what does all this mean for you and your investment portfolio?  Well, a few things come to mind:

  1. Being broadly diversified across traditional asset classes (stocks & bonds) and alternative asset classes (mortgages, real estate, others) provides you with a portfolio which performs more consistently across a broader range of market and economic conditions.
  2. Alitis’ underweighting to the stock markets means that your portfolio will not be impacted as much by what goes on in the that market.
  3. When any asset class drops in value, it becomes more attractive, not less so, and that should get you excited for the possibility of capitalizing on those events.

There has been a drop in the stock market and a bit of a bounce-back, but these market corrections are considered short-term fluctuations that in the long run, help your portfolio. It is often said that the markets are governed by two emotions – greed and fear. People tend to get greedy after markets have risen because they see everyone else making money and people tend to get fearful after losses that look like they will never end. The profitable thing to do is the opposite – be fearful when markets keep rising and money looks easy to make, and be greedy when markets drop and other investors are in despair. And as always, DIVERSIFY! This is what Alitis does and why we continue to anticipate making solid returns with less risk.