Emerging opportunities

Named one of WPC’s Young Guns in 2016, Victor Kuntzevitsky has made great strides as an advisor since then. He joined Northland Wealth Management as an associate in 2012, and he has since been named vice-president of investment and portfolio strategy for the firm.

“Since I was featured in Wealth Professional Canada, I obtained the CFA designation, which allowed me to invest on behalf of clients on a discretionary basis,” Kuntzevitsky says. “Once I know what their needs and objectives are, I can invest without asking every time, and that has enabled me to take on more responsibility and power at Northland.”

Kuntzevitsky’s clients are mainly entrepreneurs, which meant he was especially busy in the lead-up to the recent federal budget. The government’s changes to passive investment income, in conjunction with a new tax regime south of the border, have led many businesses to seriously consider making a move to the US. According to Kuntzevitsky, Northland Wealth Management is among them – the firm is currently seeking the guidance of tax and legal experts to assess the feasibility of relocating.

“The United States is a much more favourable jurisdiction to be based in,” he says. “Look at Florida, where if you are a business owner and the company pays you income, you don’t pay taxes on an individual basis. The corporate tax rate is only 21%, compared to as high as 30% in some provinces in Canada.”

Relocating a business to a different country is not a decision to be taken lightly, but there are a number of precedents, Kuntzevitsky explains.

“There was a big push a couple of years back when some of the pharmaceutical companies relocated to Ireland,” he says. “They were doing reverse takeovers – taking over small companies and using them as their head office for Ireland’s low corporate tax rate. The same thing is happening now with Canadian companies and the United States.”

While tax planning is an important part of Northland’s service, it is in portfolio construction that Kuntzevitsky has really earned his spurs. Using public and private equity alongside alternative strategies, he adopts a longterm approach designed to safeguard his clients’ assets. Providing consistent returns is also vital, and increasingly, he’s been looking outside of Canada to achieve that goal.

“We are very much allocated to emerging markets; using a 10- to 50-year outlook, we believe the future of our world is in Asia – it is in China and in India,” he says. “That’s where we have significant allocations in our portfolios.”

With a GDP of $11.8 trillion, China is expected to soon overtake the US as the world’s largest economy in terms of purchasingpower parity. Its transformation from agrarian nation to economic superpower is now being replicated in India, currently the sixth largest economy in the world. Growth in both countries is being facilitated by a burgeoning middle class, and given that each country has a population exceeding a billion people, they represent considerable investment potential in the coming decades.

“We see huge opportunities through the public markets, buying ETFs and gaining access to China, and the same for India,” Kuntzevitsky says. “The MSCI Index doesn’t track local shares in China, so we have exposed ourselves to those A-shares, trying to take advantage of the slow-moving train that is MSCI and FTSE indexing.”

That opportunity extends to the private markets, too, especially in those sectors that correlate most with an expansion of the middle class, such as consumer discretionary and financials.

While the growth potential in China and India is no secret, Kuntzevitsky is spreading his net wider in the search for attractive returns. Most recently, that search brought him to the relatively underdeveloped economies of Indonesia, Malaysia and Thailand.

“I think the middle class in all of Asia will do exceptionally well,” he says. “We really like Indonesia, Malaysia and Thailand due to their young population and access to information as the playing field evens out.”