Foresight - Winter 2025

Our client portfolios continue to benefit from robust growth in global equity markets, as well as stable returns in our bond portfolios. Over the last 1 1/2 years, our portfolios have seen mostly double-digit returns (ranging from 8.8% to 22%), for equity proportions between 45-65%. Over that period, the equity portion has averaged 18% and the fixed income portion 6%. Over the last five years, portfolios with an asset allocation plan of 40% fixed income and 60% equities have seen their assets grow over 50%. Indeed it has been a very good five years for capital earners and their portfolios, especially considering that during that period we have endured numerous examples of Nick Murray’s “Apocalypse du Jour”:

• global economic ramifications and market concerns over the new US administration

• the backdrop of the Covid pandemic

• surging interest rates

• the return of inflation

• the US global tariff policies

• two bear markets

• supply chain disruptions

  
  

Given how rewarding the last five years have been, one would think investors’ sentiment would be far more positive than what we are seeing in the marketplace. While talk of global recession and market bubbles continue to weigh heavily on investor sentiment, we continue to have a positive outlook for the global economy over the coming decade (as highlighted in previous Foresight editions). What is important to note is that, as positive as we are vis-à-vis the market outlook, our discipline directs us to review every client portfolio every month and to rebalance them when they become out of line with their asset allocations between equity and fixed income weightings. This discipline is driven by our proprietary systems, including “Calls to Action (CTA)”, which pinpoint where to respond. We explained this in detail in the Fall 2024 Foresight (see archive on our website).

In a bull market, as we are currently experiencing, stocks will incrementally outperform bonds, resulting in their becoming overweight in the portfolio. This overweight position results in a rebalancing, by selling down equities and buying fixed income to bring the portfolio back into line with its asset allocation plan. In the bygone days, this was called “taking profits”! Given that the outperformance by equities tends to be incremental, rather than surging, it is unlikely that rebalancing would be called every month. We recently sampled a number of portfolios that had no material deposits or withdrawals and over the last twelve months those portfolios were rebalanced four times to “take profits”. Note that the portfolios’ asset allocation weightings did not affect the number of times the portfolios were called to rebalance.

This discipline of rebalancing is why we don’t spend time worrying about the timing of the next recession or bear market, as we are consistently rebalancing through the bull market. And...on the other side ….when the bear market does come, we are ready to respond in the opposite direction by selling bonds to buy “stocks on sale”...as happened in Covid March 2020. Our rebalancing discipline insulates portfolios from the significant drag on returns of being out of a market...even for a short period of time (See Summer 2021 Foresight edition). The back page article drills deeper on this topic.

Note that our new website went live in the Summer. You can opt for digital delivery of Foresight.

The 2025 Survey Results

We recently sent out our quadrennial survey, which had a 25% response rate and we thank you.

KEY SURVEY RESULTS	Excellent	Good	Combined
Frequency of our communication	97%	0%	97%
Fit between portfolio strategy and personal goals	87%	13%	100%
Adherence to the portfolio strategy	85%	15%	100%
Portfolio returns relative to risk profile	59%	38%	97%
Investment management approach	97%	3%	100%
Overall value as investment managers	82%	15%	97%

Your Annual Report is an integral part of our investment management on your behalf. It provides short and long term information on your financial health, including:

Your current year rate of return	Adherence to your strategy
Your historical compound returns since inception	Your total income earned since inception and its impact upon your portfolio value
Key metrics of your portfolio	Your net withdrawals or contributions and our fees over the year

ANNUAL REPORT SURVEY	Excellent	Good	Combined
Timeliness of delivery	68%	30%	98%
Usefulness of Annual Report	36%	62%	98%
Your understanding of the Annual report	26%	49%	75%
Summary	63%	34%	97%
Compound returns history	46%	51%	97%
Graph of portfolio growth and returns	41%	51%	92%
Fixed income and equity reporting	40%	53%	93%
Attached detailed reports	32%	58%	90%
Accompanying performance graphs	36%	51%	87%

For 30+ years, our quarterly newsletter, Foresight, has aspired to inform and educate on various aspects of personal finance:

FORESIGHT SURVEY	Excellent	Good	Combined
Value of Foresight newsletter	31%	54%	85%

Your feedback included “Can you dumb it down a bit?”, “Focus on the key messages and skip the details”, “I don’t understand a lot of it, but enjoy reading it”. Note that, after a hiatus until the Fall issue, Foresight has returned to digital delivery via our new-and-improved website. Those who previously opted for digital delivery will see this re-established with this Winter 2025 issue. If you wish to join them, please contact us in time for the Spring edition.

We asked you to rate the importance of various sub-areas to your financial well-being, which many of you reported to be “very important”:

Investment management	97%	Tax management	64%
Financial planning	80%	Estate planning	44%
Investment strategy	92%

From both of our last surveys in 2017 and 2021, tax management and estate planning each dropped notably in importance, whilst investment management & strategy and financial planning remained foremost. Your feedback included assistance with: “Executorship services”, “Tracking ACBs of US securities”, “Estate planning” and “Financial Planning”.

We asked you to rate the services of your Custodian:

NATIONAL BANK SURVEY	Excellent	Good	Combined
The clarity of your monthly NBIN statements	54%	36%	90%
The NBIN online account access	54%	34%	88%

In closing, we will take a bow to the kudos we received...with thanks.

“I have nothing but the highest regards for your services”	“You are doing great-don’t change a thing”	“I feel very fortunate to be part of the AFT “Tribe”
“I  have had excellent service for the past 30+ years and am very grateful”	“As a client, I feel valued and there is a strong sense that  staff genuinely care”	“We have had wonderful service over many years...thanks for all you do”
“Providing peace of mind that we will be okay financially”	“I am glad someone recommended Trivest to me”	“We appreciate your awareness, anticipation and perseverance in handling market changes on our behalf”

...And we will be addressing your responses re Foresight, your Annual Report and other insights identified by your comments:

• We will review and re-assess the nature and complexity of the contents of Foresight. Excellent rating under 60% signals need for improvement

• We will advance our resources to fulfill your needs identified above

• We will review and re-assess the contents of our Annual Report. “Excellent” ratings under 60% signal need for improvement

• We will once again strike up an ad hoc Advisory Committee of clients to assist with these, and other, matter

Investing Update

We have been tracking the annual returns since 2021 for sample files on the two main components of portfolios—fixed income “D” and equity “E” markets, as well as the Combined return, which is the byproduct of the asset allocation proportions of fixed income and equity markets that you have chosen.

In the Summer issue, we updated investment returns to last March 31st. We roll forward here for the following six months to September 30th.

We note the following for these 57 periods:

• The average rolling fixed income return was 1.69%, versus 13.70% for equities

• Fixed income was negative in 37% of those 56 periods, versus 14% for equities

• The average rolling combined return was 8.06%

• On average, equities contributed 87% of the combined return

• Rolling combined returns were negative in 16% of those 56 periods...in sequence from June 2022 through March 2023. We noted the major anomaly during 2022 when both rolling fixed income and equity returns were negative for half of that year. We noted in the Summer 2023 edition that this has only happened three times in almost a century (1931, 1937 and 1969)

  
  

The graph below (using the left scale) shows the rolling one-year and three-year annual compound returns for those same files for these 57 periods. The one-year returns (light line) range from 23% (post-Covid recovery) to –7%. The three-year compound returns (dark line) mostly run 4-8%, with three spikes significantly above that (11%) and three minorly below that (3%). The average three year rolling return was 6.26%. Even through the poor (mostly negative) years that lasted for two years from April 2022 (annual returns from 1.12% to –6.57%), the average three year return going forward was 5.40%.