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Recommended Asset Mix
...Continued from previous page
(i.e.: 7.5% above its benchmark of 55%
and part way toward its upper limit of
70% for equities), that would imply
a tactical shift of + 5.02% to 25.02%
for the Very Conservative profile (i.e.:
a proportionate adjustment above the
benchmark equity setting of 20% within
the allowed range of +/- 15%).
The value-added of tactical strategies
are, of course, dependent on the
Very conservative
Asset Class
Range
Last Current
quarter recommendation
Cash & Cash Equivalents 5% 0-15% 7.5% 5.5%
Fixed Income 75% 55-95% 71.4% 71.7%
Total Cash & Fixed Income 80% 65-95% 78.9% 77.2%
Canadian Equities 10% 5-20% 10.6% 10.4%
U.S. Equities 5% 0-10% 7.0% 7.7%
International Equities 5% 0-10% 3.5% 4.7%
Emerging markets 0% 0% 0.0% 0.0%
Total Equities 20% 5-35% 21.1% 22.8%
Conservative
Asset Class
Benchmark
Benchmark
Range
Return
Last Current
quarter recommendation
Cash & Cash Equivalents 5% 0-15% 7.5% 5.5%
Fixed Income 60% 40-80% 55.5% 55.5%
Total Cash & Fixed Income 65% 50-80% 63.0% 61.0%
Canadian Equities 15% 5-25% 16.0% 15.5%
U.S. Equities 10% 0-15% 12.9% 13.7%
International Equities 10% 0-15% 8.1% 9.8%
emerging markets 0% 0% 0.0% 0.0%
Total Equities 35% 20-50% 37.0% 39.0%
degree to which the expected scenario
unfolds.
Regular review of portfolio weights is an
essential part of the ultimate success
of an investment plan as it ensures
that current exposures are aligned with
the level of long-term returns and risk
tolerances best suited to individual
investors.
1. Average Return: The average total return produced by the asset class over the period 1977 – 2012, based on monthly results.
2. Volatility: The standard deviation of returns. Standard deviation is a statistical measure that indicates the range around the average return within
which 2/3 of results will fall into, assuming a normal distribution around the long-term average.
Volatility
35-year average 9.4% 6.2%
Last 12 months 5.2% 1.9%
Anchoring portfolios with a suitable
strategic asset mix, and placing
boundaries defining the allowed range
for tactical positioning, imposes a
discipline that can limit the damage
caused by swings in emotion that
inevitably accompany both bull and
bear markets.
Very Conservative investors will seek income with
maximum capital preservation and the potential
for modest capital growth, and be comfortable
with small fluctuations in the value of their
investments. This portfolio will invest primarily
in fixed-income securities, and a small amount
of equities, to generate income while providing
some protection against inflation. Investors
who fit this profile generally plan to hold their
investment for the short to medium term
(minimum one to five years).
SAMPLE
Return
Volatility
35-year average 9.7% 7.5%
Last 12 months 2.5% 3.0%
Conservative investors will pursue modest
income and capital growth with reasonable
capital preservation, and be comfortable with
moderate fluctuations in the value of their
investments. The portfolio will invest primarily
in fixed-income securities, with some equities,
to achieve more consistent performance and
provide a reasonable amount of safety. The
profile is suitable for investors who plan to hold
their investment over the medium to long term
(minimum five to seven years).
6 I The global investment outlook RBC INVESTMENT Strategy coMMITTEE Summer 2012