SciVest Low-Volatility Dividend Income Strategy
The Low-Volatility Dividend Income Portfolios are engineered for investors who are moderately risk adverse, but also seek relatively high dividend income and some capital appreciation with relatively low volatility risk (as compared to the equity indexes). The Strategy is currently available in both a 20-stock Canada-focused version and a 30-stock US-focused version. The SciVest Low-Volatility Dividend Income Portfolios invest in mid-to-large capitalization, dividend-paying, Canadian or US listed equity securities with lower-than-average volatility risk and higher than average dividend yield. To maintain discipline and consistency, SciVest employs quantitative models and rules to implement the Strategy within client accounts, as well as dictating equity buy/sell decisions, sector weights, industry weights, security weights, etc.
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Investment Objective
The primary objective of the SciVest Low-Vol Dividend Income Portfolios is to provide dividend income that is materially higher than the market indexes with moderate capital appreciation and materially lower volatility risk than the market indexes. The Portfolio is also expected to provide diversification relative to capitalization weighted stock market indexes.
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Investment Concept
Low return volatility underlies the “Low-Risk Effect” - the empirical finding that higher risk measured by either return volatility risk or market (beta) risk is not rewarded with a higher return within in global stock markets, as would generally be expected. The Low-Risk Effect has been widely studied within the academic and quantitative investment practitioner communities. SciVest has found that combining lower risk, higher dividend yield stocks that have relatively strong stock price momentum produces a portfolio with attractive long-term risk and return characteristics, with good downside protection and a high dividend income stream.
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Investment Risk
If held on their own, the SciVest Low-Vol Dividend Income Portfolios are considered medium-low risk, with expected long-term volatility risk materially lower than the broad-based stock market indexes such as the S&P/TSX Composite Index and/or the S&P 500 Index. When the SciVest Low-Vol Dividend Income Portfolios are combined with other equity and fixed income portfolios, they are expected to lower overall portfolio risk through diversification.
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Investment Strategy
The SciVest Low-Vol Dividend Income Strategy is a systematic, rules-based, equity strategy that invests in large capitalization dividend-paying stocks, which meet a number of liquidity and risk management constraints, that are selected using the SciVest Low-Vol Dividend Factor. The SciVest Low-Vol Dividend Factor ranks stocks with the best combinations of the highest dividend yields which have the lowest volatility risk and the best price momentum. That is, the SciVest Low-Vol Dividend Factor identifies those low-risk stocks with the highest dividend yields, where the dividend yield has been ‘confirmed’ by relatively good stock price movements. The Factor is a composite of 3 concepts: (i) stock price volatility (lower better); (ii) indicated dividend yield (higher better); and (iii) stock price momentum (higher better). The SciVest Low-Vol Dividend Income Portfolios are rebalanced and reconstituted quarterly moving towards the then current highest ranked SciVest Low-Vol Dividend Factor stocks, on an equal-weighted basis, while still abiding by turn-over, liquidity, income yield and risk management constraints. These constraints include a targeted Portfolio dividend yield that is at least 1.5% p.a. higher than the relevant stock market index (either the S&P/TSX Composite Index or the S&P 500 Index) and strict maximum and minimum relative exposures to sectors and industries as compared to the relevant stock market index, so that Portfolio has a similar make-up across various segments of the economy as the stock market index.
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Investment Highlights
☑️Provides significantly higher income than most fixed income and equity alternatives, with moderate expected long-term capital appreciation.
☑️Long-term risk and risk-adjusted return characteristics much better than the relevant stock market index, with good downside protection.
☑️Rules-based, disciplined, investment strategy that has been rigorously tested with over 20 years of data.
☑️Dividend income at least 1.5% higher than the relevant stock market index (S&P/TSX Composite Index or S&P 500 Index).
SciVest Growth Of Dividend Income Strategy
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Investment Objective
The primary objectives of the SciVest Growth of Dividend Income Portfolios, in order of priority, is to provide: (i) consistent and above average dividend income yield; (ii) growth in the absolute level of dividend income through time; and (iii) moderate long-term capital appreciation. The Portfolio is also expected to provide diversification relative to capitalization weighted stock market indexes.
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Investment Concept
Inflation is the greatest enemy to investors who expect to consume the income produced by their investment portfolios. Inflation reduces the purchasing power of both the income produced by investment portfolios as well as the capital value of the portfolio itself. The only solution to this inflation problem is to have a portfolio whereby income grows consistently and indefinitely – a “growing income” portfolio as opposed to a “fixed income” portfolio. Dividend-growth equities is one of only a couple of investments that exhibit these growing income characteristics (real estate is the other). Additionally, a growing income portfolio should in the long-term increase in capital value at a rate approximately equal to its income growth rate (whereas a fixed income portfolio does not increase in value). That is, long-term capital appreciation of the Growth of Dividend Income Portfolios is a consequence of focusing on attractive growth-of-dividend-income investments. Get dividends right, and you will ultimately get share prices right.
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Investment Risk
If held on their own, the SciVest Growth of Dividend Income Portfolios are considered medium risk, with expected long-term volatility risk consistent with the broad-based stock market indexes. When the SciVest Growth of Dividend Income Portfolios are combined with other equity and fixed income portfolios, they are expected to lower overall portfolio risk through diversification.
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Investment Strategy
The SciVest Growth of Dividend Income Strategy is a fundamentally based equity strategy that invests in dividend-paying stocks that are expected to grow their dividends at a high rate, in the context of their current yield, using the SciVest Growth of Dividend Income (“GDI”) Score as its foundation for the growth-yield trade-off. That is, there is generally a trade-off between dividend (and earnings per share) growth relative to the level of dividend yield for any given stock. The SciVest GDI Score accounts for this dividend growth-yield trade-off, allowing for comparison of higher yielding slower growth companies to lower yielding faster growing companies. SciVest typically strives to have its holdings achieve a SciVest GDI Score of 20 to 40 – for example, a SciVest GDI Score of 30 could be achieved by a 5% yielding stock growing its dividend by 6% p.a. or by a 2.0% yielding stock growing its dividend by 15% p.a. The Strategy is also very focused on company and stock fundamentals, with the average portfolio holding typically having cheaper valuations than the overall stock market indexes – in addition to having materially higher average dividend yields and dividend growth rates.
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Investment Highlights
☑️Unique growing income strategy, with a high current income yield, that solves the fixed income dilemma (i.e., low fixed income yields that do not grow through time).
☑️Strong value/valuation focus, and thus positioned well for the future given the current “growth stock bubble”.
☑️Tax efficient dividend income that is much higher than than the relevant stock market index (S&P/TSX Composite Index or S&P 500 Index).
☑️Designed as a “forever” investment strategy, applicable to investors at all stages of life.
☑️10-year+ successful live track record.
The SciVest Growth of Dividend Income Portfolios are engineered to provide: (i) relatively high dividend income; (ii) growth in the absolute level of dividend income through time; and (iii) moderate long-term capital appreciation. The Strategy is currently available in both a Canada-focused version (20-30 holdings) and a US-focused version (30-40 holdings). The SciVest Growth of Dividend Income Portfolios invest in mid-to-large capitalization, dividend-paying, Canadian or US listed equity securities which are expected to grow their dividend payments to investors through time. SciVest believes that focusing on dividend-paying companies that are expected to grow their dividends through time results in long-term capital appreciation of the portfolio – that is, long-term capital appreciation of the portfolio is a consequence of focusing on attractive growth of dividend investments.
SciVest Price Momentum Strategy
The SciVest Price Momentum Portfolios are engineered to deliver total returns which in the long-term exceeds that of the relevant stock market index, while also providing diversification relative to the index. The Strategy is currently available in 12, 24 and 30-stock Canada-focused versions as well as a 30-stock US-focused version. The SciVest Price Momentum Portfolios invest in small, mid and large capitalization equity securities which have exhibited medium-term price momentum, or relative strength, as compared to other stocks in the respective market. To maintain discipline and consistency, SciVest employs quantitative models and rules to implement the SciVest Price Momentum Strategy within client accounts, as well as dictating equity buy/sell decisions, sector weights, industry weights, security weights, etc.
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Investment Objective
The primary objective of the SciVest Price Momentum Portfolios is to deliver capital appreciation which in the long-term exceeds that of the broad stock market indexes such as the S&P/TSX Composite Index and/or the S&P 500 Index. The SciVest Price Momentum Portfolios are also expected to provide diversification relative to capitalization weighting stock market indexes.
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Investment Concept
Price Momentum is a relative strength concept - that is, price momentum assumes that, in the medium term (6-18 months), stocks that have been outperforming will continue to outperform, and stocks that have been underperforming will continue to underperform. Price Momentum has been widely studied within the academic and quantitative investment practitioner communities, with 100’s of peer reviewed, scientific journal articles published since Price Momentum was first documented in 1993. These peer reviewed academic articles show that Price Momentum is one of the most powerful predictors of future individual stock returns ever discovered and that there are a wide range of behavioural, psychological, structural, fundamental and risk based theoretical reasons for momentum's strong predictive power.
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Investment Risk
If held on its own, the SciVest Price Momentum Portfolios are considered medium-high risk to high risk (depending upon the specific SciVest Price Momentum Portfolio), with expected long-term volatility risk higher the broad-based stock market indexes. When the SciVest Price Momentum Portfolios are combined in moderation with other equity and fixed income portfolios, they are expected to lower overall portfolio risk through diversification.
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Investment Strategy
The SciVest Price Momentum Strategy is a systematic, rules-based, equity strategy that invests in stocks which meet a number of liquidity and risk management constraints, that are selected using the SciVest Price Momentum Factor. The SciVest Price Momentum Factor is designed to capture both the magnitude and the quality of each stock’s price momentum. It is a weighted average of 3 price momentum concepts: (i) trailing medium-term stock returns; (ii) current stock price relative to the stock’s 52-week high; and (iii) the consistency and uniformity of the stock’s 52-week price trend. The SciVest Price Momentum Portfolios are rebalanced and reconstituted monthly moving towards the then current highest ranked SciVest Price Momentum Factor stocks, on an equal-weighted basis, while still abiding by turn-over, liquidity, and risk management constraints. These constraints include strict maximum exposures to sectors, sub-sectors, industries and sub-industries so that Portfolio is always well diversified across numerous segments of the economy. As a result, the SciVest Price Momentum Portfolios are typically a diversified collection of stocks reflecting the most popular, most interesting and/or fastest growing companies within the current economic environment.
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Investment Highlights
☑️Rules-based, disciplined, investment strategy that has been rigorously tested with over 20 years of data.
☑️Long-term returns significantly higher than stock indexes.
☑️Provides significant diversification (i.e., risk reduction) when added to almost any other existing diversified portfolio.
☑️Basis of strategy is scientifically proven by academic research to have worked well in virtually all global markets, and appears especially well-suited for the Canadian market.
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