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Posted by Michael Scott on Jul 12th, 2021

Reap the Reward Without the Risk: Protecting Portfolios from Inflation

As traditional assets are generating some of the lowest yields in history, income-oriented investors are faced with a dilemma: do you change your strategy by taking on more risk? Or tolerate a lower level of income? For many investors, the latter is simply not an option, but the former is also undesirable. Aware that investors were facing this no-win trade-off, Purpose created the  Purpose Multi-Asset Income Fund (PINC) which provides investors with access to an active, risk-managed portfolio of diversified securities that generate above average yields. The fund offers exposure to a broad range of asset classes, sectors, strategies, styles, and regions. It also invests in a number of traditional equity and fixed-income strategies, preferred shares, financial derivatives, and alternative investments, such as real estate investment trusts (REITs) and commodities. This diversity, in addition to active portfolio management, allows PINC to deliver returns while balancing risk with reward particularly in volatile markets.

The Purpose Multi-Asset Income Fund Value Proposition

1. PINC is an ideal solution for any investor looking to enhance their portfolio’s yield.[1]

Portfolio incorporating PINC

PINC has superior yields to traditional 60/40 portfolios and can be incorporated as a sleeve within any portfolio to boost yield while maintaining a comparable level of risk. The fund has consistently delivered monthly dividends to investors over the last five years, providing a steady stream of income not found in traditional broad-based indices. By implementing PINC in a traditional portfolio, investors may increase their portfolio’s yield without dramatically altering the return profile of the portfolio. For investors or advisors who frequently deal with income targets, PINC provides an elegant, risk-managed solution.

[1] Weighted average yields include the: S&P/TSX Composite Index (“Canadian Equities”), S&P 500 Dividend Yield (“US Equities), MSCI ACWI NR USD (“International Equities”), CIBC Global Bond Index (“Global Fixed Income”), and Purpose Multi-Asset Income Fund (“PINC”).

2. PINC leverages a range of tools and tactical flexibility, enabling our portfolio managers to meaningfully swing portfolio composition in response to changing market dynamics.

The business cycle

Purpose’s portfolio managers take the burden of stress off investors during periods of market turmoil. The pandemic was a trying time for most investors as economic recovery, interest rates, and the performance of different asset classes were uncertain. Unlike traditional 60/40 funds, which allocate assets based on security type, PINC is tactically managed with a dynamic asset allocation strategy that preserves capital by minimizing exposures with strong secular headwinds. Moreover, PINC is designed to have low cross-correlation between income streams, which increases resiliency and enables our managers to pursue higher yields without an incremental increase in portfolio risk. PINC is the ideal vehicle to transition away from a traditional portfolio built for the last market regime.

3. PINC maintains low interest rate risk relative to traditional income sources.
Steady accretion from lower rates have stretched valuations in long-duration assets. “Lower yields” is a just another way to say inflated asset prices. Investors are at a fork in the road: should you double down on duration and hope that the next 20 years will look like the last? Or should you insulate your portfolio from potential inflation in the future? PINC provides an effective solution as its low duration makes volatile interest rates irrelevant to performance, enabling managers to focus on adding value through fundamental, idiosyncratic sources.

4. With decades of industry experience, our portfolio managers bring unique expertise in respective asset classes to ensure PINC is a top-of-the-line, tactically managed solution.

Between 2016 and today, managers at Purpose have achieved stable income return to investors

Purpose has achieved stable income return to investors

PINC is a one-ticket solution that brings together experienced portfolio managers Greg Taylor, Sandy Liang, and Barry Morrison to give investors access to the higher upside potential of equity and the lower volatility of fixed income.

Greg Taylor: Greg is a data-driven manager with a focus on managing risk through active-trading strategies. He specializes in finding and exploiting pockets of volatility in the market to drive returns. Greg spent more than 15 years managing pension and mutual fund assets at Aurion Capital Management and was a senior portfolio manager at Front Street Capital and LOGiQ Asset Management prior to joining Purpose Investments. Greg has won numerous Brendan Wood International “TopGun” awards and is a regular host and guest on BNN Bloomberg and Toronto’s all-news radio station, 680News.

Sandy Liang: Sandy’s research-driven investment approach, honed through more than 30 years of deep-dives into multiple industries as analyst and investor, emphasizes margin of safety and ensures a favourable risk/reward ratio. Sandy brings specialized knowledge in alternative fixed income including high-yield corporate debt, preferred equity, investment-grade corporate debt and leveraged equities to the team. Sandy has won a Canadian Hedge Fund Award for his performance in the credit-focused category for three straight years in 2018, 2019, and 2020. Sandy also manages the Purpose Strategic Yield Fund, which has achieved a five-star rating on Morningstar. In addition to managing funds, Sandy is the expert behind the Purpose Alternative Fixed Income LinkedIn page, which provides investors with timely and insightful information about corporate credit and income strategies.

Barry Morrison: Barry has over 52 years in the industry, 23 of which he spent running dividend portfolios. In 1992, he partnered with Les Williams and started Morrison Williams to run institutional money for ultra high-net-worth families and institutional clients across the country. At Purpose, Barry leverages his years of experience to expertly manage equity and multi-asset funds.

— Michael Scott, Investment Analyst, and Claire Vaughan, Product Analyst at Purpose Investments


All data sourced to Bloomberg unless otherwise noted.

The content of this document is for informational purposes only, and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained on this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement or public offering of securities. No securities commission or similar regulatory authority has reviewed this document and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable, however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice and neither Purpose Investments Inc. nor is affiliates will be held liable for inaccuracies in the information presented.

Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments and Greg Taylor and Sandy Liang believe to be reasonable assumptions, Purpose Investments and Greg Taylor and Sandy Liang cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. The indicated rate of return is the historical annual compounded total return including changes in share/unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated

Fund mentioned in this story

Michael Scott, CAIA

Michael Scott is a CAIA charterholder and a keen advocate of thoughtful portfolio construction. His work primarily focuses on private assets and manager selection, identifying outcome oriented opportunities in private markets for funds across the Purpose shelf.