The David Miner Communiqué—Fall
While I love the summer and the sunshine, the fall offers
cooler temperatures and a drive to change with the season– much like the youthful days of summer vacation ending and it is time
again to move into a different gear. I spent a few days in San Francisco,
California in September, part of the time meeting with some of the good
people at Franklin Templeton which is headquartered in San Mateo.
Dorinda and I also spent some quality time visiting the wine country north
of San Francisco – Napa, Sonoma, and Alexander Valleys. While we are
not wine snobs, it was a great experience.
David and Dorinda enjoying Napa Valley wine country in September.
“In the short run, the market is a
voting machine, but in the long run it is a weighing machine”
- Benjamin Graham
Economic and Market Commentary:
The Federal Reserve Board in the United States has begun to ease interest rates in response to a
difficult credit environment. The US dollar continues to weaken, and the U.S. real estate market
is suffering, with U.S. residential real estate inventories exceeding ten months. On a positive
note, the U.S. corporate sector is buoyed by strong balance sheets. While we expect weaker
spending by U.S. consumers, that weakness will be offset in part by increasing consumerism in
developing countries like China and India. Developed economies such as the United States and
Great Britain continue to evolve into service economies and lose their manufacturing base to developing
third world nations.
Fixed Income vs. Equity
We expect that equities will outperform bonds, although bonds continue to serve as a great portfolio
stabilizer. Furthermore, many institutional equity portfolios such as pension plans are favoring
global equity to domestic equity. We do encourage equity investors to avoid too much
concentration in Canada, despite our currently hot loonie and resource sector. As always, our
mantra is “balance and diversification”. Avoid big bets to avoid big disappointments.
While the recent rise of the loonie is impressive, the
strength of the Canadian dollar has a negative effect on
manufacturing and exports and possibly a negative lag
effect on the Canadian economy. Cross border shopping
has certainly shifted in favour of the United States
David & Dorinda at
Teatro ZinZanni in San Francisco
Franklin Templeton Investments Corp.
We have highlighted Franklin Templeton in the past. There are few firms that offer the same
level of care with tremendous breadth and depth of management. I visited the head office of
Franklin Templeton in San Mateo, California in September. Having worked with Franklin
Templeton now for almost a quarter of a century, I continue to become more impressed with the
organization and its people.
While there, the president of Franklin Templeton Canada, Don Reed, remarked
that the flagship fund of the organization, Templeton Growth
Fund, started in 1954. A $10,000 investment at inception has grown to
over $7 million today – not bad for what has sometimes been described
as a dull mutual fund. Nevertheless, that represents a compound average
annual return of well over 13%. So if that is dull, I like it! And while it
may have been possible to buy a house in 1954 for $10,000, that same
house is not worth even close to $7 million today.
“It’s a kind of spiritual snobbery
that makes people think that they can be
happy without money.”
- Albert Camus
David & Dorinda at Lake Sonoma in California
Quotential from Franklin Templeton is
one of Canada’s leading wrap (or fund-offunds)
programs with attractively low
management expense ratios and excellent
diversification by asset class and management
style. There are 27 different funds
incorporated into 8 different Quotential portfolios. There are two layers of management. At the
fundamental level is the portfolio management specific to each individual fund. At a higher level
is the management of fund allocation and rebalancing. This higher level of management is performed
seamlessly and in the background, but serves to enhance risk adjusted returns over the
long-term. Furthermore, this constant fine-tuning and rebalancing among funds is outside the
scope and administrative capability of any individual advisor (humbly including yours truly).
Franklin Templeton offers Quotential portfolios in a number of tax efficient ways including mutual
fund trusts, corporate class, and T-SWP (for tax efficient income needs). This terminology
sounds technical and full discussion is outside the scope of this newsletter. Nevertheless, suffice
it to say that with this selection of structures, tax efficiency can be optimized to fit each individual
Franklin Templeton is the largest public investment counsel in the world with approximately
$669 billion under management. The team at Franklin Templeton includes 470 portfolio managers
and analysts situated in 29 different countries around the globe. Under the one Franklin
Templeton umbrella, different management styles are also available from deep value to growth.
Blending styles, a philosophy that we have always supported, serves to generally reduce overall
Below is a sample list of Quotential portfolios available with average annualized compound return
performance to September 30, 2007 for the past 5 years. All of these performance numbers are in the first or second quartile according to Morningstar.
||1 Yr Ret
Franklin Templeton Balanced Growth
Portfolio (Inception: 08/19/02)
|Franklin Templeton Global Growth
Portfolio (Inception: 06/09/03)
Franklin Templeton Growth Portfolio
Quotential Program: Key Benefits
- Excellent Diversification – The Quotential Program offers eight different portfolios,
each built on the principle of diversification, and including at least six proven
underlying funds. Each Quotential Portfolio has an unmatched degree of diversification
by asset class, geographic region, market capitalization and investment style.
- Proven Performance – Quotential Portfolios are built to take advantage of
Franklin Templeton Investments’ multiple management styles. Each Quotential
Portfolio consists of well-established proven underlying funds from Templeton,
Franklin, Bissett and Mutual Series.
- Exclusive Management – Investors now have access to Franklin Templeton’s
strategic asset allocation experience.
- Accessibility – A single, simple package available at an investment minimum of
$25,000. With this investment, investors receive one of the industry’s best wrap programs
“Don’t measure yourself by what you have
accomplished, but by what you should have
accomplished with your ability.”
- John Wooden
After the Toronto Marathon on
October 14, 2007.
, the real advantage to investors
in working with us is the depth of
knowledge and understanding of the
managers and the portfolio management
process that we offer, coupled
with meticulous care in structuring
strategies that are tailored to individual
client needs. And the real benefit to
all clients is that we provide service
on a no-load (ie., no commissions to
buy, redeem, or switch between
Mutual fund performances changes in share value and reinvestment of all dividends but do not take into account
sales, redemption, distribution of optional charges or income taxes which may have reduced returns. Fees and expenses
are associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are
not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds are not
insured by the Canada Deposit Insurance Corporation or any other deposit insurer and are not guaranteed.