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Risk Management


Risk comes in many forms, but the surprise of risk is the most harmful.

Define RISK:  financial, income, investment, opportunity, health, or family well-being. Or, is it strictly the loss of capital; or the volatility of the investment; or simply the unexpected happening?


One key element in our process is to help clients recognize and manage their risk through their entire life cycles. There is different Risk at each stage of life. Whether it is risk capacity or risk tolerance, we analyze both styles of risk for each client and advise on the most appropriate path. Manage risk and return will follow.

On a very high level, there are two types of Risk. There is the client's tolerance to Risk, and there is the client's financial capacity to Risk. In other words, can the client tolerate the emotion of the price volatility that comes with the Risk? Or, is the client financially capable to take on certain Risk? Conversely, the emotion of Risk may taint the client's capacity for Risk. For example, if a client cannot tolerate any price volatility of the investment, but 'wants, likes, needs' investment returns well above the rate of inflation, their financial capacity to Risk may outweigh their emotion to Risk.

It is our responsibility to guide the client in understanding their personal Risk emotion and capacity. Both types of Risk are hinged to the client's vision, objectives and goals.

In building the client's PLAN we assess their Risk, and in building their portfolio we ensure the Risk is the most suitable in keeping with their risk tolerance and capacity. The creation of the client's portfolio (detailed in Portfolio [asset] Construction) illustrates how Risk is applied. By way of a lexicon, one can look at portfolio investment Risk as having 4 concentric circles plus 1 outside circle.

Centre Core; Core; Cyclical; Growth; and Hard Assets. 

The very Centre Core holds the most stable and longest term asset or group of assets. It is the foundation from which your other assets build. Its relative weight to your overall asset base is inversely proportionate to the amount of risk you take on through your other assets. That is, if your risk tolerance is low, the weighting of the Centre Core ought to be high. Ideally, the Centre Core has very low volatility, is not correlated to the stock or bond markets and is tax efficient. It is the stabilizing force in your portfolio in what otherwise can be an uncertain financial marketplace. Also, it can increase your overall portfolio's return by way of 'efficient diversification".


The Core of your portfolio is characterized by dividend blue chip stocks, bonds and other high quality fixed income. Yield, yield and yield. Building a portfolio with excellent dividend, coupon, and distribution yield is a cornerstone to our growth and income style. "Get paid as you wait" is a great mantra we stand by. Sustainable yield in a portfolio is also indicative of the portfolio's strength over time.

The Cyclical portion of your portfolio holds positions that are sensitive to market cycles. It carries an increased amount of risk compared to the Core or Centre Core portions of your portfolio. An oil and gas stock is a typical example of a cyclical position. As its name implies, holding cyclical positions is not constant over time. The amount held should vary as the economy moves through its cycles.

The Growth portion of your portfolio is higher risk. It lies on the outer limits of the portfolio risk spectrum. Growth positions are usually represented by low, or no dividend yield, higher price earnings and higher volatility. The benefit in owning growth positions is mainly derived from their potential of capital appreciation. In measured doses, the Growth portion can offer efficient diversification, counter to the Centre Core position.

Built together as an overall portfolio, Centre Core, Core, Cyclical and Growth each play a role in reducing the risk and increasing the return.


The Hard Assets in the extreme outer ring of the Risk Management map, Cottage, House, and Company Assets are designed to be managed separately from the financial assets you own. These hard assets are less liquid and by definition, riskier.

"There is comfort and peace of mind in knowing that everything we do is disciplined, consistent and has the integrity to stand up to the stringent fiduciary commitment we hold for each one of our clients." - Peter W Bradley

Call 613-755-2061 Ext.224