Leverage expertise from around the world with a multi-manager approach

For Canadians considering their next investment, it would be hard to match Canada LifeTM for the sheer size, reach and variety of options.

With $98 billion in assets under management and 20 sub-advisors, this 175-year-old icon of the Canadian financial industry has worked hard to ensure its clients have access to markets and assets across Canada and around the world.

While it’s an impressive quantity of options for investors, Chris Koltek, a portfolio strategist within the firm’s PSG, is quick to highlight the quality of those investments as well. Koltek has over 23 years of experience in the wealth industry and an extensive history at Canada Life. As an Institutional Client Portfolio Strategist within PSG at Canada Life Investment Management Ltd. (CLIML), he’s the central source of product knowledge for PSG’s solutions. During a recent interview with Wealth Professional, Koltek shared his perspective on the investment landscape today, while shedding light on some of the skills and strategies that make his team at PSG so successful.

Power of partnerships

A key strength of PSG’s approach to investing is their extensive network of partners. Through these partnerships with multiple high-caliber managers across a wide range of asset classes, Canadian investors benefit from access to opportunities that are typically out of reach. The list of Canada Life’s partners is a who’s-who of leading investment firms, including Beutel Goodman, Mackenzie Investments, and GWL Reality Advisors, among others.  “We really embrace the idea of an open architecture of investment partners,” Koltek says. “This broad approach gives us access to a diverse range of strategic assets as well as the flexibility to move quickly and tactically.”

To complement this wealth of investment options around the world, PSG also uses proprietary optimization models to assess risk and titrate just the right amount of exposure to different asset classes. It’s a set of solutions that’s proved to be invaluable during the volatility of the past several years. “One of the things we're really proud of is how we went from a risk-on market in 2021 to the risk-off market in 2022,” Koltek says. “The models held up very well, illustrating their ability to weather a range of market cycles.”

Top performers

The Canada Life portfolio has been able to adapt to recent market swings, and more. They have consistently outperformed as well.  “We’re consistently in the first or second quartile for both the Canada Life Allocation Funds (our segregated) and Canada Life Portfolio Funds (the mutual funds) over the last year,” he says. “By leveraging the strength of the Canada Life wealth platform, and making strategic decisions around asset allocation, we are always looking to be well positioned for tomorrow's investment realities and opportunities.”

According to Morningstar, no less than 100% of Canada Life Portfolio Funds (which are managed by CLIML), were in the first or second quartile for the year up to March 31, 2023. For the periods covering two, three and five years annualized, 80% of the funds performed above the median. It’s a similar story for Canada Life’s segregated funds, which are available through The Canada Life Assurance Company. Over the past one- and two-year periods, 100% of the Canada Life Allocation Funds (75/75 P series) portfolios were in the first or second quartile within their respective CIFSC categories.

Koltek attributes this success over the past few years to their ability to continually evolve as market conditions change. “We took a detailed look at our strategic asset allocation back in 2019 and 2020,” he explains. “We asked ourselves ‘where should we step on the gas and where should we tap the brakes?’ Then in 2020 and 2021, we rolled out changes that included a greater focus on equities and some foreign securities – and that generated attractive returns over the last two years.”

Return Details

Canada Life Portfolio Funds have provided excess returns over the category median returns:

_{Source: Morningstar, March 31, 2023.  CIFSC Peer Groups. Partner series do not include advisory and management service fee.}

Return Details

Canada Life Portfolio Funds have provided excess returns over the category median returns:

_{Source: Morningstar, March 31, 2023.  CIFSC Peer Groups. F Series do not include advisory and management service fee. The inception date for the Canada Life Conservative Portfolio fund is Nov. 28, 2006. The inception date for all other funds listed is Jan. 15, 2001.} 

Market outlook

To ensure they have the right mix of assets for a given period, Koltek and his colleagues at PSG keep a close eye on a wide range of variables that shape the direction and health of the global economy. Asked about his thoughts on the economy today, Koltek highlighted the continued uncertainty driven by the impacts of inflation and interest rates. “There’s still economic uncertainty driven by inflation, concern about the strength of the global financial sector, the impact of higher rates, and geopolitical risks. This is all contributing to the volatility in the markets,” he says. “I think we're at an inflection point right now. We’re swinging back and forth between strength in fixed income and strong equity returns, between value and growth, while investors assess how the economy will adjust to an extended period of higher inflation and interest rates.”

The team at PSG believes inflation has likely peaked, and that suggests both the U.S. and Canada are approaching the tail end of their rate hikes. As to how higher rates will impact the economy over the next year or so, Koltek says they’re looking at higher expectations for a recession. In Canada, there are signs that people have less disposable income as the cost of living rises. “We’re seeing a lot of pessimism,” he says, while adding that there are a number of positive factors as well, particularly with the robust job market. These mixed signals out of the economy have PSG adopting a “neutral” to benchmark approach to fixed income and equities, with fixed income now benefiting from higher interest rates instead of acting solely as a risk management tool.”

“Our portfolios are strategically built for the longer term” Koltek says. “But we also have a shorter tactical period where we can modestly adjust portfolio factors such as the proportion of equity to fixed income and domestic to foreign equity levels. Additionally, the underlying managers we partner with can adjust their holdings to position the funds opportunistically based on the market environment.”

Looking ahead, Koltek cites concerns about the impact of inflation and higher rates on future earnings growth. “U.S. equity valuations appear a bit extended relative to the rest of the world and that raises concerns for us and some of our underlying managers.”

Overseeing multiple funds, markets and assets is a demanding task, especially when the global economy is roiled by impossible-to-predict lockdowns and wars. To address challenges and identify opportunities, Koltek credits the impressive experience and diverse skill sets of investment partners around the world as well as his tight-knit group of colleagues at PSG. “Each of us brings a unique element to a very collaborative process. We are deeply committed to the idea of designing a portfolio that positions us to win today, tomorrow and in the years to come.”

About PSG

Portfolio Solutions Group (PSG) is a division of Canada Life Investment Management Ltd., a wholly owned subsidiary of The Canada Life Assurance Company (Canada Life).  PSG uses a multi-manager approach to benefit from some of the world’s best management styles, investment philosophies and risk management strategies.

Contact your Canada Life wealth wholesaling team today to talk about some of our top performing investment solutions and how they can help you meet your clients’ financial goals. Further information can be found on their website: Wealth and asset management | Canada Life Investment Management Ltd.

_Disclaimers:

_{Mutual funds:}

_{Percentile rankings are from Morningstar Research Inc., an independent research firm. The percentile rankings compare how a fund has performed relative to other funds in a particular category and are subject to change monthly. The number of Canadian Fixed Income Balanced funds for the Canada Life Conservative Portfolio and Canada Life Moderate Portfolio for each period are as follows: one year – 397; three years – 339; five years – 293; 10 years – 208. The number of Global Neutral Balanced funds for the Canada Life Balanced Portfolio for each period are as follows: one year – 1,631; three years – 1,352; five years – 1,165; 10 years – 527. The number of Global Equity Balanced funds for the Canada Life Advanced Portfolio for each period are as follows: one year – 1,253; three years – 1,030; five years – 880; 10 years – 434. The number of Global Equity funds for the Canada Life Aggressive Portfolio for each period are as follows: one year – 1,947; three years – 1,640; five years – 1,341; 10 years – 643.}

_{Segregated funds:}

_{Percentile rankings are from Morningstar Research Inc., an independent research firm. The percentile rankings compare how a fund has performed relative to other funds in a particular category and are subject to change monthly. The number of Canadian Fixed Income Balanced funds for the Canada Life Conservative Allocation and Canada Life Moderate Allocation for each period are as follows: one year – 693; three years – 691. The number of Global Neutral Balanced funds for the Canada Life Balanced Allocation for each period are as follows: one year – 818; three years – 725. The number of Global Equity Balanced funds for the Canada Life Advanced Allocation for each period are as follows: one year – 941; three years – 861. The number of Global Equity funds for the Canada Life Aggressive Allocation for each period are as follows: one year – 997; three years – 881.}

_{©2023 Morningstar.  All Rights Reserved.  The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.  Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.  Past performance is no guarantee of future results.}

_{Canada Life segregated funds are available through a segregated funds policy issued by The Canada Life Assurance Company. Canada Life mutual funds are managed by Canada Life Investment Management Ltd. Both products are offered exclusively through Quadrus Investment Services Ltd. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution, or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value. A description of the key features of Canada Life's individual variable insurance contract is contained in the information folder, available from your advisor.} 

_{Canada Life and design, and Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company.}