We currently focus our efforts on four unique investment programs and strategies: (i) the SciVest Customized Asset Allocation Program; (ii) the SciVest Growth of Dividend Income Strategy (with Canadian, US and global versions); (iii) the SciVest Low-Vol Dividend Income Strategy (with Canadian and US versions); and (iv) the SciVest Price Momentum Strategy (with three Canadian versions).
SCIVEST CUSTOMIZED ASSET ALLOCATION PROGRAM
The SciVest Customized Asset Allocation Program has the objective of delivering investors long-term capital appreciation and moderate income through investment in a number of asset classes that are captured by a series of index-based ETFs and other funds/strategies. Within the three macro asset classes of fixed income, equity and alternatives, SciVest models numerous sub-asset classes (e.g., Canadian bonds versus US bonds, or Japanese equities versus European equities). In sum, SciVest currently considers over 100 sub-asset classes for potential inclusion in an investor’s portfolio.
Each investor’s portfolio is individually selected from a large number of possibilities, depending upon the individual investor’s risk tolerance and/or other objectives and constraints. The Program provides investors with a pension/endowment investment approach – that is, the Program has a long-term (10+ year), forward-looking, investment view implemented using a disciplined, ultra-diversified, index-based, investment approach at ultra-low cost.
The SciVest Customized Asset Allocation Program seeks to maximize long-term return for a pre-set fixed overall portfolio risk budget which is determined by investor risk tolerance and/or other objectives and constraints. The Program is quantitative and rules-based, with daily over-sight and generally semi-annual rebalancing. Typically, portfolio holdings include 7 to 15 low-cost, liquid ETFs and may also include (depending upon account size) allocations to SciVest single stock strategies (as described below).
The SciVest Customized Asset Allocation Program often forms the underlying asset allocation basis for SciVest client separately managed accounts.
SciVest Growth of Dividend Income Strategy
The SciVest Growth of Dividend Income Strategy has the objectives of delivering investors: (a) a consistent and above average current dividend income yield; (b) meaningful growth in the absolute level of dividend income growth through time; and (c) moderate long-term capital appreciation.
The Strategy is a dividend income-based strategy, with a focus on dividend income growth through time. It seeks stocks with dividend-growth-at-a-reasonable-price, or “DGARP”. The Strategy is “traditionally” managed, with a strong valuation/value bias.
We believe that inflation is the greatest enemy to all retired and semi-retired investors. Inflation erodes both the purchasing power of the retirement investment pool and, more importantly, the purchasing power of the retirement income that the investment pool produces. The effects of inflation erosion on the purchasing power of fixed income investments and the fixed income they generate is material over any period longer than several years. For example, at a 3% per annum inflation rate, income and capital are eroded by 26.3% after 10 years, 45.6% after 20 years, 59.9% after 30 years, and 70.4% after 40 years. We believe that the only way to counteract this degradation of purchasing power through time is to focus on growing income, as opposed to fixed income, where such income growth is at a rate at least as high as the inflation rate.
The SciVest Growth of Dividend Income Strategy focuses on providing dividend income growth and sustainability, at a reasonably high level of current income yield, under the premise that if these objectives are met then over the long-term capital appreciation will inevitably follow. That is, long-term capital appreciation is a consequence of growing earnings and dividends. With moderate income growth and moderate capital gains, investors can maintain the purchasing power of both their income stream and investment capital pool indefinitely into the future.
We currently offer the SciVest Growth of Dividend Income Strategy with 3 variants: Canadian, US and global. Typically, the Canadian Strategy holds 20-30 mid-to-large-cap, Canadian-listed, dividend-paying, equity positions, and the US Strategy holds 30-40 mid-to-large-cap, US-listed, dividend-paying, equity positions.
This is SciVest’s oldest operating strategy, and is the strategy that is held within the AlphaDelta Global Dividend Income Class mutual fund.
SCIVEST LOW-VOL DIVIDEND INCOME STRATEGY
The SciVest Low-Volatility Dividend Income Strategy has the objective of delivering investors consistent and above average current dividend income yield with low price volatility risk, and moderate long-term capital appreciation.
The Strategy is a dividend income-based strategy, with an emphasis on low stock price volatility and lower overall market risk. It seeks stocks with higher-than-average dividend yields and with lower-than-average stock price risk. Focus is on good market upside capture and low market downside capture. The Strategy is quantitative and rules-based, with daily over-sight and quarterly rebalancing.
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.
We currently offer the SciVest Low-Volatility Dividend Income Strategy in 2 variants: Canadian 20 stock, and US 30 stock. Typically, Canadian Strategy holds 20 mid-to-large-cap, Canadian-listed, dividend-paying, equity positions, and US Strategy holds 30 mid-to-large-cap, US-listed, dividend-paying, equity positions.
SciVest PRICE MOMENTUM Strategy
The SciVest Price Momentum Strategy has the objective of delivering long-term capital appreciation. While “capital gains oriented”, the Strategy is designed to be tightly risk-managed and diversified.
The Strategy is a total return maximization strategy, with the objective to generate higher risk-adjusted returns than the stock indexes. It seeks stocks that have been performing relatively well over the past year, in comparison to other stocks in the universe. The Strategy is quantitative and rules-based, with daily over-sight and monthly rebalancing.
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 articles show that Price Momentum is one of the most powerful predictors of future individual stock returns ever discovered.
We currently offer the SciVest Price Momentum Strategy in 3 variants (depending upon account size): Canadian 12 stock, Canadian 24 stock, and Canadian 30 stock. Typically, the Strategy holds 12/24/30 small-to-large-cap, Canadian-listed, equity positions.