Our Difference > Protecting You On The Downside
Protecting You on the Downside
At Verus Financial we understand the how valuable it is to protect your hard earned money. Capital preservation in down markets is at the heart of what we do. We have had immense experience in tough times. We have successfully guided our clients through the following crisis's:
The 80's S&L Colapse
The 2001 Tech Bubble
The 2008 Financial Crisis
The 2020 COVID-19 Pandemic
Over this span of years, we have been extremely diligent in protecting our clients assets on the downside. Our unique ability to transfer in and out of assets classes and our ability to go to high levels of cash has help our client maintain their wealth through down markets.
Below we outline the largest monthly drops on the Toronto Stock Exchange compare to our Verus Defensive Income Portfolio. While the TSX dropped over 83.22% over these months, our portfolio dropped a mere 11.73%. For a total out performance of 71.49%
HOW WE PROTECT
1) Individual Portfolio Managers
The first line of defence lies with each of our unique world-class managers. Each one of these portfolio management teams have been through multiple crisis and have the experience to navigate their specific realm through these tough times.
We have also equipped them with unique investment policy statements, which allows them to be more flexible in times of distress. They have more ability to allocate capital to areas of safety than most other portfolio managers in Canada. Whether it’s increasing/decreasing certain sector exposures or raising cash, they have the ability to be adaptable to the market.
2) Tactical Asset Allocation
The second line of defence lies in our ability to be proactive and tactical with our client’s asset allocation. It’s important to be adaptable to the ever changing world as political, economic, and investing environments change.
Through our market and economic research, we have the ability to shift our clients to defensive areas if we see a deteriorating landscape. This risk management practice has the ability to substantially limit losses when assets become correlated in times of severe distress.
3) Alternative Asset Exposure
Alternatives can provide diversification and downside protection if done right.
They can have low correlation with other investments in the portfolio help to reduce the overall risk of your portfolio.
How to Measure Protection
One of the keys metrics used to measure the downside protection of a portfolio is the Downside Capture Ratio.
Downside Capture Ratio - Used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped.
Example) If a portfolio has a downside capture ratio of 80, this means they are only capturing 80% of the downside. If the index drops 10%, this manager would be expected to only fall 8%. Thus, the lower the downside capture ratio, the better.
Take a moment to look at how each one of our Verus Portfolios helps protect you on the downside:
Verus US Focus Growth
Verus International Growth
Verus High Income
At Verus Financial, we pride ourselves on having managers with some of the best downside capture ratios in the industry. This important metric is always provided to our clients on a quarterly basis. Sometimes in investing, it’s not how much you make. But rather how much you keep. For more details on each one of our portfolios, please visit the Verus Portfolios tab.