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INVESTING ESSENTIALS CENTRE

Managing Risk

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Asset Allocation

Asset allocation helps reduce risk through diversification and is one of the most important decisions an investor can make.

Asset allocation (Select up to two):

Fixed Income / Equity (% allocation to each)

Asset allocation
40/60
Asset mix one
100
Asset mix two
40/60
Asset mix one
100
Asset mix two

Investment Growth

Asset allocation is a key factor in the risk-return profile of a portfolio. Historically, higher allocations to equities have resulted in higher long-term returns, but with greater levels of short-term volatility.

Best 1 year period

49.5%

9 years

$39,000
$50,000

Best 1 year period

49.5%

Best 1 year period

49.5%
40% / Equities 60%
Equities 100%

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Universe Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

Best and Worst Years

Investing and risk are a package deal. The key to long-term investment success is to manage your exposure to risk by using time and asset allocation to your advantage.

40% Fixed Income / Equities 60%

Equities 100%

Best 1 year period

Sep 2007 - Sep 2008

Best 1 year period

Worst 1 year period

Best 1 year period

Worst 1 year period

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Best years reflect the highest annualized returns and worst years reflect the lowest annualized returns based on the indicated rolling period over 43 years from January 1980 to December 2022. The percentage reflects the occurrence of positive returns and negative returns for each asset allocation based on the indicated rolling period over 43 years from January 1980 to December 2022. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Universe Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

How the portfolio performed

While the performance of a portfolio can vary from one year to the next, the majority of past returns have been positive.

40% Fixed Income / Equities 60%

Positive 1 year returns (50%)

Negative 1 year returns (50%)

Equities 100%

Positive 1 year returns (50%)

Negative 1 year returns (50%)

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Best years reflect the highest annualized returns and worst years reflect the lowest annualized returns based on the indicated rolling period over 43 years from January 1980 to December 2022. The percentage reflects the occurrence of positive returns and negative returns for each asset allocation based on the indicated rolling period over 43 years from January 1980 to December 2022. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Universe Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

Time to Recover

The longer you hold an investment, the smaller the impact a market downturn has on your total return. This chart uses historical data to show the average 3-month downturn of each asset allocation between 1980 and 2022, the time it took to recover and the value of the portfolios 1, 3 and 5 years after the downturn.

3 months

$9,788

3 months

$9,788

3 months

$9,788
40% / Equities 60%
Equities 100%

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Starting downturn reflects the average of negative rolling 3-month returns for the indicated asset allocation. Time to recover reflects the amount of months taken, on average, to recover the original investment amount following the average 3 month downturn. Investment amounts after 1, 3, and 5 years are based on the cumulative average return for each respective period following the average 3-month downturn. The illustration is hypothetical and does not reflect actual results or the returns or future value of an actual investment. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Short Term Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

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Managing Risk

Asset allocation is a key factor in the risk-return profile of a portfolio. Historically, higher allocations to equities have resulted in higher long-term returns, but with greater levels of short-term volatility.

Your inputs

Investment amount:

$10,000

Asset Mix 1

60% Fixed Income / 40% Equity

60/40

60% Fixed Income / 40% Equity

Asset Mix 2

100% Equities

100

100% Equities

Investment Growth

investment growth graph
green legend
60% Fixed Income / 40% Equities
blue legend
100% Equities

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Universe Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

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Best and Worst Years

Investing and risk are a package deal. The key to long-term investment success is to manage your exposure to risk by using time and asset allocation to your advantage.

60% Fixed Income / 40% Equities

asset mix one best and worst graph

100% Equities

asset mix two best and worst graph
orange legend

Best 1 year period:

Jun 1982 - Jun 1983 (49.5%)

light orange legend

Worst 1 year period:

Feb 2008 - Feb 2009 (-13.0%)

purple legend

Best 1 year period:

Jun 1982 - Jun 1983 (49.5%)

light purple legend

Worst 1 year period:

Feb 2008 - Feb 2009 (-13.0%)

How the portfolio performed

While the performance of a portfolio can vary from one year to the next, the majority of past returns have been positive.

60% Fixed Income / 40% Equity

asset option one

dark orange legend Positive 1 year returns (50%)

light orange legend Negative 1 year returns (50%)

100% Equities

asset allocation option 2

dark purple legend Positive 1 year returns (50%)

light purple legend Negative 1 year returns (50%)

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Best years reflect the highest annualized returns and worst years reflect the lowest annualized returns based on the indicated rolling period over 43 years from January 1980 to December 2022. The percentage reflects the occurrence of positive returns and negative returns for each asset allocation based on the indicated rolling period over 43 years from January 1980 to December 2022. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Universe Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

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January 1st, 1970
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Time to Recover

The longer you hold an investment, the smaller the impact market highs and lows will have on your total return.

This chart uses historical data to show the average 3-month downturn of each asset allocation between 1980 and 2022, the time it took to recover and the value of the portfolios 1, 3 and 5 years after the downturn.

orange legend
60% Fixed Income / 40% Equities
blue legend
100% Equities
time to recover graph
  60% Fixed Income / 40% Equities 100% Equities
Start value $10,000 $10,000
3 months value $11,327 $10,641
1 year value $11,327 $10,641
3 year value $11,816 $10,413
5 year value $11,816 $10,413
Recovery time period 36 month 36 month

Source: Morningstar. For illustrative purposes only. Based on monthly returns in Canadian currency from January 1980 to December 2022. Starting downturn reflects the average of negative rolling 3-month returns for the indicated asset allocation. Time to recover reflects the amount of months taken, on average, to recover the original investment amount following the average 3 month downturn. Investment amounts after 1, 3, and 5 years are based on the cumulative average return for each respective period following the average 3-month downturn. The illustration is hypothetical and does not reflect actual results or the returns or future value of an actual investment. Assumes reinvestment of all income and no transaction costs or taxes. Amounts are rounded to the nearest dollar. Fixed income is represented by the FTSE Canada Short Term Bond Index. Equity is represented by equal weight of S&P/TSX Composite Total Return Index and MSCI World Index. It is not possible to invest directly in an index.

Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. The information provided is not intended to be investment advice. Investors should consult their own professional advisor for specific investment advice tailored to their needs when planning to implement an investment and/or tax strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

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January 1st, 1970

Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. This site has been prepared by 1832 Asset Management L .P. and is provided for information purposes only. The information provided is not intended to be investment advice. Investors should consult their own professional advisor for specific investment and/or tax advice tailored to their needs when planning to implement an investment strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

Information contained on this site, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and 1832 Asset Management L .P. is not responsible to update this information. To the extent this site contains information or data obtained from third party sources, it is believed to be accurate and reliable as of the date of publication, but 1832 Asset Management L.P. does not guarantee its accuracy or reliability. Nothing on this site is or should be relied upon as a promise or representation as to the future. Graphs and Charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. Indices are not managed and you cannot invest directly in an index.

Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed or insured by the Canada Deposit Insurance Corporation or any other government deposit insurer, their values change frequently and past performance may not be repeated.