The Renaissance Advisor by renaissancemag

The Renaissance QUARTERLY FUND PROFILES / PRACTICE MANAGEMENT / OUTLOOK / OPINION

Q1 – MAR. 31, 2016

The Art of Advising the Affluent Introducing Renaissance Private Investment Program

For Advisor Use Only

Page

In this issue

Economic Outlook 4 The Symptoms of Withdrawal Tax and Estate 6 Good and Bad News for Philanthropic Clients Global Market Perspectives Will the Bank of Canada Cut Interest Rates Again?

The Art of Advising the Affluent 8

6 8

Solution Highlight 12 Tactical access to fixed income opportunities around the globe Brazilian Beauty

Thanks to Our Supporters 17 Affluent Clients Deserve the Highest Level of Service Brain Calisthenics 18

From the Managing Director of the Renaissance Sales Team

Here Come the “Affluentials” Welcome to the spring edition of The Renaissance Advisor. Our focus is on providing advice to today’s affluent clients—a segment that is growing at historic rates and who are seeking customized investment solutions that meet their unique needs. Whether you are just now tapping into this demographic, or want to expand your already-established presence, it is important to understand what makes this group tick. The life stage at which investors become affluent also marks a change in their mindset. In our feature article, The Art of Advising the Affluent, we explore the motivations and needs of these individuals, the desire to deepen advisor relationships, and what investment solutions must deliver to meet their heightened expectations. When advising affluent clients and recommending financial solutions, consider the Renaissance Private Investment Program, a tailor-made solution built to fit the investment needs of today’s affluent investors. The program includes 13 investment pools, from traditional to alternative assets, leveraging specialized investment management from across the globe. We also want to introduce you to our new Renaissance Flexible Yield Fund, a fixed income solution that combines high-yield like returns with potentially lower volatility. We’re delighted the renowned Jeffrey Gundlach of DoubleLine®, an expert in bonds and other debt-related investments, and recipient of many industry accolades, is the lead portfolio manager. As always, we also hear from our experts. Jamie Golombek discusses measures introduced by the current government that bring good and bad news for philanthropic clients, and Ben Tal weighs in on the current pains of global markets. As always, we thank you for your business and welcome your feedback.

Shelly McLean Managing Director, National Sales Renaissance Investments

DoubleLine® is a registered trademark of DoubleLine Capital LP

The Symptoms of Withdrawal economic outlook

T he pains global markets are experiencing are not due to addiction—they are the symptoms of withdrawal. The addiction was excessive savings in China, Germany and Japan, which was translated into wasteful investment and leveraged spending in many consuming countries.

Now, the dramatic decline in commodity prices represents a huge transfer of funds from producing countries to consuming countries (estimated at over 1% of global GDP in 2015). Furthermore, the decline in capital investment in China will open the door to much more productive investment elsewhere. This means that when the fog clears, the global economy will be much more balanced than it has been in many years. From a long-term perspective, withdrawal pains are better than short-term euphoria.

“ ...the decline in capital investment in China will open the door to much more productive investment elsewhere.”

and reduced profit margins due to deflationary producer prices. The real test will be when the transition to a more consumer-oriented society leads to increased unemployment. When it happens, we will get a better sense of how committed China is to reform. Accordingly, China will continue to be a source of volatility in the coming year, with important negative implications for most emerging markets.

“ ...China will continue to be a source of volatility in the coming year, with important negative implications for most emerging markets.” As for emerging markets, with Asiaphobia taking over from Asiaphoria, the impact of slowing emerging markets (EM) on the rest of the world is currently of crucial importance. As China tries to rebalance its economy and find the optimal path between an aggressive reform agenda and an acceptable rate of GDP growth, there’s a non-trivial risk of an accident. But to date, the market’s reaction to slowing EMs has probably been too severe, as investors overestimate the linkage between emerging markets’ weakness and passthrough to developed economies. When the fog clears, EM differentiation will continue to be a theme, with policy stimulus and the pull from developed market growth paying dividends in 2017.

But it’s not over by any stretch of the imagination. One should not underestimate the difficulties facing China in its transformation from a producing economy to a consuming economy. The first issue is credibility. The market’s reaction to news from China is not only due to the increased realization that China is slowing, but more due to new doubts about the ability of the authorities to deal with the situation in any effective way. So in many ways, the current crisis is a crisis of credibility as opposed to a crisis of fundamentals.

Now, what about the benefit of lower commodity prices in consuming economies? The only place where this impact is visible is the eurozone, where consumer spending has been rising nicely alongside rising real income. In the U.S., a lot of that money went into savings. The difference in behaviour can be explained by the fact that pent-up demand in the zone is higher and the oil shock is a pure positive, while in the U.S. the impact is mixed. However, given the pace of employment growth south of the border, it’s reasonable to assume that American consumers will convert some of that savings into spending in 2016.

The second issue is that, in reality, China has not faced the ultimate test yet. So far, the main pain has been in low returns on unproductive investment

As for oil, beyond the volatility, the bigger picture is that the fundamental story is turning a bit better. From a demand versus supply perspective, one

“ ...Iran might increase production by 500,000 bpd, but that would be totally offset by a prediction of a 500,000 bpd decline in shale oil production.” The reason that Saudi Arabia is even entertaining the notion of a production cut might be the fact that the risk of oil falling to, say below $30 per barrel, represents more pain than gain. If the Saudis want to recapture market share and reduce appetite for investment in alternative energy, they can achieve that goal at $40 per barrel. Accordingly, the dynamics and durability of a drop from $60 to $40 per barrel are very different than those from $40 to $30 per barrel.

“ In Canada, nowhere is the dramatic decline in crude prices more visible than in capital spending.” In Canada, nowhere is the dramatic decline in crude prices more visible than in capital spending. Energy-related investment lost one-third of its might in 2015, with more cuts coming. And when oil prices recover, don’t expect a quick turnaround in energy capex as the correlation between price and Canadian spending is probably much lower than it was in the pre-shale era. Other sectors will have to step up to the plate, and it’s starting to happen. Relatively large-scale infrastructure spending will carry some of the weight. A more balanced spending distribution, free of the crowding out effects of

energy investment—along with an appropriately valued dollar should also work to raise the capex intensity of non-energy sectors. Accordingly, we expect the Bank of Canada to sit on its hands for the foreseeable future, allowing the U.S. Federal Reserve to hike by at least 75-100 basis points, before starting its own hiking trajectory. Slowdown in Emerging Markets Was Broadly-Based 8 6 Avg 2012-2015 (% Growth)

can easily paint a reasonable scenario in which the crude market will reach zero surplus by the end of the year. Yes, Iran might increase production by 500,000 bpd, but that would be totally offset by a prediction of a 500,000 bpd decline in shale oil production. Note that shale oil production was up by 900,000 bpd in 2015—despite a significant cut in the rig count. But that productivity improvement (largely due to an increase in the frack count, reduced labour and improved data-gathering techniques) is probably reaching its peak. Any additional cut by OPEC will be a bonus here and will work to accelerate the march toward equilibrium.

4 2 0 -2 -4

Source: IMF, CIBC

Avg 2000-2011 (% Growth)

Benjamin Tal is Deputy Chief Economist for CIBC. Described as one of Canada’s leading experts on the real estate market by the International Monetary Fund, he is responsible for analyzing economic developments and their implications for North American fixed income, equity, foreign exchange and commodities markets. www.renaissanceinvestments.ca/en/economy/ renaissanceinvestments.ca/en/economy/

Good and Bad News for Philanthropic Clients Tax AND Estate

For clients wishing to donate to their favourite charities, measures introduced by the current government bring good and bad news.

Donations by High-income Donors Donations attract both federal and provincial non-refundable tax credits. On the federal side, for the first $200 of annual charitable donations taxpayers get a credit of 15%, which is equal to the lowest federal marginal tax rate. The federal credit rate jumps to 29% for cumulative donations above $200, to match the top federal marginal tax rate that applied prior to 2016. Starting in 2016, a new federal tax rate of 33% was introduced for taxpayers with taxable income exceeding $200,000. The good news is that to the extent that donors have taxable income subject to the new 33% top rate, a 33% federal tax credit will be available for the portion of donations that total more than $200 annually. There may, however, still be a rate mismatch, depending on your clientâ&#x20AC;&#x2122;s province of residence, as not all provinces have adopted their top tax rate as their donation credit rate. For example, high-income donors in Ontario currently pay tax at a combined federal/Ontario marginal tax rate of 53.5% while the combined federal/Ontario donation credit is about 46.4%. Donations in Kind Since 2006, donations of publicly traded shares, mutual funds or segregated funds to a registered charity have yielded a tax receipt equal to the fair market value of the securities or funds being donated. Clients can also avoid paying capital gains tax on any accrued gain on the shares or funds donated.

Similarly, an employee who has received stock options can avoid paying tax on the stock option benefit, by choosing to donate the shares obtained from an option exercise to charity within 30 days of exercise. A rule was proposed by the former government, which would have put donations of the proceeds from the sale of appreciated private corporation shares or appreciated real estate after 2016, on a similar footing as donations of publicly traded securities. The measure was praised by the charitable sector when it was introduced last year as a wonderful incentive that would spur the philanthropically inclined to consider major gifts to a variety of Canadian charities in 2017 and beyond. The bad news is a quiet announcement made by the current government in the 2016 Federal Budget. It is not proceeding with draft legislation that would have exempted capital gains from tax when the proceeds from the sale of real estate or private company shares are donated to a registered charity.

Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC Wealth Advisory Services. He works closely with advisors to help them provide Âintegrated financial planning solutions for their high-net-worth clients. Jamie is frequently quoted in the media as an expert on taxation. Follow @JamieGolombek

renaissanceinvestments.ca/en/jamie_golombek/

Will the Bank of Canada Cut Interest Rates Again? Global Market Perspectives

The Bank of Canada (BoC) is apparently still wearing rose-coloured glasses. The BoC is convinced that the Canadian economy is about to experience a recovery, led by increased exports. In the BoC’s view, Canadian exports will benefit from stronger demand from the U.S. and restored Canadian competitiveness due to a weak Canadian dollar. If this forecast comes true, manufacturing sectors will be a smaller drag on growth and the overall Canadian economic outlook will be brighter. Unfortunately, we are not as upbeat as the BoC. If Canadian growth disappoints, the BoC will be forced to cut rates again. There are three reasons for our view.

“ The BoC assumes that the U.S. economy will grow by 2.4% over the next 12 months.” First, the BoC is too optimistic about growth prospects south of the border. The BoC assumes that the U.S. economy will grow by 2.4% over the next 12 months. This is more optimistic than projections from the Federal Reserve (Fed). Furthermore, our team is even less upbeat than the Fed, working with a 1.8% U.S. growth forecast. If our assessment is correct, U.S. demand for Canadian products will likely be weaker than the BoC expects.

“At the end of 2015, Canadian labour costs were below U.S. costs for the first time in eight years.” Second, the recently stronger Canadian dollar (versus the U.S. dollar) has recovered enough to compromise the BoC’s hoped-for recovery in non-oil exports. True, Canadian non-oil exports to the U.S. started recovering in late 2015. However, this happened because weakness in the Canadian dollar produced a significant decline in Canadian labour costs (in U.S. dollar terms) and, therefore, the manufactured cost of goods. At the end of 2015, Canadian labour costs were below U.S. costs for the first time in eight years.

Unfortunately, since the start of the year, the Canadian dollar has recouped a lot of the ground it lost in 2015. As a result, when expressed in U.S. dollar terms, Canadian labour costs are back above those of the United States. Finally, for the BoC’s forecast to materialize, the Canadian consumer has to remain in high gear. But with employment growth running at only 0.65%, slower wage growth and strong demographic headwinds (i.e. the overall population is aging), this forecast is very much at risk.

“...the federal deficit will be a lot larger this year, but this partly reflects the impact of weaker economic growth on government revenues.” Is it possible that sluggish growth in the private sector will largely be offset by stronger government spending? After all, the latest federal budget substantially increased public spending. True, the federal deficit will be a lot larger this year, but this partly reflects the impact of weaker economic growth on government revenues. The actual fiscal stimulus amounts to no more than 0.5% of GDP for the coming year. Luc de la Durantaye is Head of Asset Allocation and Currency Management with CIBC Asset Management. He is responsible for strategic and tactical asset allocation, currency management, absolute return strategies and index management.

Perspectives For the period beginning April 1, 2016

Asset Allocation Outlook as at April 1, 2016 Underweight

Neutral

Overweight

Asset Class

MONETARY POLICY RUNNING ON EMPTY While some global risks have recently receded, they have not disappeared. Global debt levels remain high by historical standards. Even though the cost of financing the debt is lower, the global growth supporting the eventual debt repayment has also declined, leaving a precarious equilibrium. Meanwhile, demographic trends are still deteriorating; this is one of the root causes of persistent sluggish economic activity. With interest rates near zero and many unconventional monetary policy tools close to their practical limit, the ability of central banks to stimulate growth seems more limited. This could leave the U.S. Federal Reserve as the “last man standing”.

Significant Moderate

Moderate Significant

Equity Relative to Fixed Income Fixed Income Canadian Money Market Canadian Government Bond

Canadian Corporate Bond International Government Bond

Equity Canadian Equity U.S. Equity International Equity (Developed Markets)

P P P

Emerging Markets

Underweight

Go to renaissanceinvestments.ca to read the full Perspectives report

Neutral

Overweight

Currency (versus U.S. Dollar) Significant Moderate

Canadian Dollar Euro

Japanese Yen British Pound Swiss Franc Australian Dollar Emerging Markets

P P P

Moderate Significant

P Perspectives | 1

renaissanceinvestments.ca/en/theeconomy/

art of advising

the

the affluent Understanding the motivations and needs of the wealthy

Canada has the eighth-largest population of millionaires in the world1 And more Canadians are joining the ranks of the rich. Industry researcher Investor Economics says that by 2018, there will be about 900,000 households that will have $1 million in investable assets, excluding their main residence—up from just 358,000 households in 2003.2 The wealthy are here, more are coming and they’re offering tremendous opportunities to those engaged in the business of delivering sound advice. But affluent investors also bring with them a unique set of fears, challenges, wants and desires.

“Affluent investors have high expectations.” “Affluent investors have high expectations,” says David Scandiffio, President, CIBC Asset Management. “They want to preserve their wealth; they want solutions that are customized to meet their complex needs.” Delivering on these expectations can be difficult, adds Scandiffio, with volatile markets, low rates, complicated tax laws and a heavy dependence on Canadian or more traditional markets. Attracting and servicing affluent investors can be both a challenge and an opportunity. Here we examine today’s affluent investors, what defines them and how you can crack this segment of the marketplace. What defines the wealthy investors of today? If you want to break into the affluent market or get a bigger share of it, it’s important to understand the characteristics shared by affluent investors and their biggest financial challenges: • They have unique and complex needs. • They are much more concerned with maintaining their wealth than creating more of it. • They seek sophisticated solutions that can be adapted to their personal needs. • They expect exceptional service.

Unique and complex needs Today’s affluent investors are usually at a stage in their lives where they have more assets, more liabilities, and much more complex needs for estate planning than other investors. Wealth management becomes more intricate as clients age, have families, and as wealth is transferred. It is at these

trigger points where clients may stop asking only about investments and also start focusing on net worth, as their priorities expand from tactical investing strategies to include wealth preservation and legacy plans.3 It is also at these trigger points where relationships change. If you cannot offer innovative strategies, or have not partnered with the outside experts who can, your existing relationships could be put at risk for the future.3 Preserve and pass on wealth Preserve As a good investment advisor to your affluent clients, you may think your main job is to create more wealth. In fact, according to market research, almost 89% of affluent investors in the United States are very concerned about losing their wealth.4 This was true even before the financial crisis— and it’s become an even bigger issue since. Today’s affluent investors are also more concerned about monitoring risk in their portfolios than they were in the past—safety is key. Increasingly, you’ll be expected to offer a wide range of solutions that can help them manage risk, while still helping them to reach their goals.5 As an advisor to the affluent, then, your first priority is to see that your clients preserve and maintain the wealth that they have worked so hard to build up over the years.4 Accordingly, financial planning for affluent clients should incorporate sophisticated strategies that allow them to mitigate risk, benefit from tax efficiency and hold on to as much as they can. Pass on Unlike those still building assets, the affluent also want to safeguard their legacy plans. Passing on both their wealth and values to future generations is a top priority for the affluent—most want to ensure that their families are taken care of with the least amount of difficulty and according to their wishes. Failing to ensure that wealth goes exactly where clients want it to go can impact everything from their ability to help family members achieve their goals (such as a college education) to the long-term succession and

sustainability of a family-owned business. This means that your wealth management planning must also address estate transfer and planning, and consider legal forms of ownership—for example, trusts and limited liability entities—so legacies can be passed down through generations.4 It’s important to realize, though, that the issue of intergenerational wealth is a two-sided coin: it’s not only about the relationships you establish with your affluent clients, but also the relationships you have with their children. It’s imperative you position yourself to capture this intergenerational wealth transfer, especially with the billions of dollars being set to pass from boomers into the hands of the younger generation. Research indicates that, if you don’t have the proper relationships in place, you could end up losing up to 75% of your assets under management when clients’ assets are passed on to their children.6 To retain those assets, create targeted services and a value proposition to appeal to both parents and children. It will be vital for you to actively communicate with your clients’ adult children in family discussions and educational meetings. Helping kids understand their parents’ reasons for investing can help solidify your place and value in a family’s life.5 Customized, sophisticated solutions Affluent investors have multi-faceted lives; therefore it stands to reason that they have multi-faceted investment needs. But it seems their needs are not being met. Consider that affluent investors are seeking comprehensive advice and support for their whole financial picture. However, while 77% of affluent investors in the United States say they receive financial planning help from their advisor, far fewer report their advisor is helping with other aspects like tax planning.7 It’s the same story in Canada. According to a J.D. Power study, only 33% of investors indicate that their advisor has met three key criteria related to goals-based planning: helping set investment goals, incorporating risk tolerance into the plan and providing insight into the progress toward achieving goals.8

In addition, a Canadian Securities Institute (CSI)-commissioned survey says that when investors become affluent, they look beyond standard funds and securities; they move from building wealth to managing it and making accommodations for its transfer. In short, they develop more sophisticated investment needs. However, CSI also found that even though affluent Canadians recognize the potential value of more sophisticated wealth management services, they did not feel that complete strategic wealth advice was being delivered.3 To provide what affluent investors want and value, it’s important to build complete, all-encompassing strategies that are: Customized – to address each client’s needs Enhanced – to protect wealth and offer tax efficiency Sophisticated – through the offering of varied asset classes, including alternative assets Global – by providing access to investments and investment management around the world, rather than more traditional or domestic investments Diversified on multiple levels – to offer a balance between risk and return Remember that offering a more comprehensive approach to overall wealth management may help to increase loyalty and solidify relationships with affluent clients. Brilliant service Considering their complex financial needs, it’s no surprise that affluent clients are more concerned with the entire net worth discussion than just investments. If you want to work with the affluent, you most likely can’t do it alone. Adopt a “family office” mindset—the four disciplines of a family office are typically defined as tax and accounting, insurance, legal and investments. Decide where the greatest need exists within your practice and develop strategic alliances with the right professionals. This is not only about capturing more assets, but rather creating comprehensive, end-to-end service for your clients.9

I ntroducing RENAISSANCE

Private

INVESTMENT PROGRAM

When it comes to aligning yourself with investment partners, there’s much to consider. With so much to lose, affluent clients want to have peace of mind; they want investment solutions that are built on a framework of discipline and designed to prevail throughout the market cycle. Just as your affluent clients don’t rely on a single professional, it doesn’t make sense to depend on an investment solution that expects a single professional to navigate every part of a market, or one firm to run every asset class. Explore solutions that utilize a multi-manager approach—ones that seek out investment managers who are asset class experts, which, in turn, allows them to focus on their strengths. This allows the program’s investment strategies, and your clients, to benefit from a variety of management styles, risk mitigation strategies and the potential for enhanced returns. This institutional style of investing will likely strengthen portfolios and may even act as an enticement to affluent investors. Putting it all together

“Financial advisors can now truly customize portfolios to offer their clients personalized, innovative solutions to address PROGRAMME DE their unique needs, from wealth preservation PLACEMENTS and tax efficiency, to currency hedging MC and flexible pricing.”

Privés

– David Scandiffio, President, CIBC Asset Management

RENAISSANCE

The Renaissance Private Investment Program (RPIP) is a comprehensive solution built to address the needs of today’s affluent investors. RPIP is built on three pillars of strength: Flexibility: 13 investment pools represent a broad range of asset classes, from traditional to alternative. Multiple purchase options address tax-efficiency, income generation, U.S. dollar investing and currency hedging. The program also meets your needs as an advisor, whether your business is fee- or commission-based. It also offers negotiated dealer service fees, giving you even more flexibility to meet client needs.

As the affluent wave continues to gain momentum and the competition intensifies, there will be a select group of advisors who will stand out TM RENAISSANCE Confidence: INVESTMENT PROGRAM RPIP’s framework of discipline and comprehensive from the crowd. Those who understand the needs of the wealthy investor, pool construction is designed to prevail throughout the market and actively align with their expectations, will enjoy unparalleled growth cycle. The program uses an open architecture to seek out investment and long-term success. managers that are asset class experts, allowing the program’s RENAISSANCE PROGRAMME DE PLACEMENTS investment pools—and your clients—to benefit from a variety of management styles, risk mitigation strategies and the potential for enhanced returns.

Private

Privés

Sources: 1

a lwayssavemoney.ca/#!PROFILE-OF-A-MODERN-MILLIONAIRE/cu6k/1F9EBF92-3A43-4080-8D609DAB5F51F5D7

theglobeandmail.com/globe-investor/personal-finance/the-million-dollar-club/article1212140/

csi.ca/student/en_ca/designations/pdf/ChP_Strategic_Wealth_Whitepaper.pdf

cegworldwide.com/resources/expert-team/000-cwac-john-bowen-do-you-get-affluent

fa-mag.com/news/the-changing-affluent-investor-9836.html?section=2

t heglobeandmail.com/globe-investor/retirement/retire-family/wealth-industry-faces-huge-shift-asboomers-transfer-wealth-to-their-kids/article27169919/

i nvestmentnews.com/article/20150921/free/150929998/its-no-secret-what-affluent-investors-wantand-value-in-working-with

c anada.jdpower.com/press-releases/2014-canadian-full-service-investor-satisfaction-study#sthash. qN1nzfK4.dpuf

Asset Gathering Secrets of Elite Advisors, Back of the Napkin, Renaissance Investments, 2014

Value: Along with competitive management expense ratios, additional preferred pricing options are available through management fee reductions back to the first dollar invested. Moreover, family account linking benefits your clients and their immediate family members by providing easier entry into the program. For more information on the Renaissance Private Investment Program, visit rpip.ca and contact your Renaissance sales representative.

Tactical Access to Fixed Income Opportunities Around the Globe High-yield like returns with potential for lower volatility

SOLUTION HIGHLIGHT: RENAISSANCE FLEXIBLE YIELD FUND

The NEW Renaissance Flexible Yield Fund is designed to provide investors with an attractive combination of high-yield like returns with potential for lower volatility through its: Fund options to fit your needs

Tactical allocation – The manager may tactically adjust sector weights to capture opportunistic gains from market fluctuations Active duration management – Can help contain risks, and profit from opportunities within all interest rate environments Diversified sources of yield – Access to a broader fixed income universe can help boost yields compared to traditional fixed income sectors The fund seeks to take advantage of opportunities across various fixed income sectors around the globe.

Class A

Premium Class*

Class A (US$)

Premium Class (US$)*

Class H (Hedged)

Premium Class (Hedged)*

Class F

Class F-Premium *

Class F (US$)

Class F-Premium (US$)*

Class FH (Hedged)

Class FH-Premium (Hedged)*

*$100,000 minimum initial investment.

Opportunities from a broad range of fixed income investments

Tactical Exposure Range† 0% – 100%

Governments 0% – 50%

Investment-grade Credit

0% – 100%

Mortgages Asset-backed Securities/Commercial MBS

0% – 40%

Global High-yield Debt

0% – 50%

Collateralized Loan Obligations (CLOs)

†

0% – 30%

Bank Loans (floating rate)

0% – 50%

DM Sovereign Debt & FX

0% – 50%

Emerging Market Debt

0% – 50%

T he fund’s weight may be altered without notice based on economic, market or other conditions.

50%

100%

Partnering with The Experts The Renaissance Flexible Yield Fund is sub-advised by DoubleLine®, led by recognized bond expert, Jeffrey Gundlach.

Mr. Gundlach has received many industry accolades, including being named: • One of Bloomberg Markets magazine’s “50 Most Influential”1 in 2015 and 2012 • One of Forbes’ “Most Powerful People”2 in 2014 • Institutional Investor’s “Money Manager of the Year”3 in 2013. • Fortune Magazine’s Investor’s Guide “Mutual Fund All-Stars in 2011”4

DoubleLine is an independent, employee-owned money management firm founded in 2009. The firm offers a wide array of investment strategies run by experienced portfolio managers, employing: • Active risk management • In-depth research • Innovative product solutions

Jeffrey E. Gundlach Chief Executive Officer & Chief Investment Officer Jeffrey Gundlach is the Chief Executive Officer of DoubleLine. He is a graduate of Dartmouth College, summa cum laude, with degrees in Mathematics and Philosophy.

DoubleLine portfolio managers have been working together on average over 15 years. DoubleLine believes that the longer the team has worked together, the more consistent its philosophy and process become over multiple market cycles. DoubleLine also sub-advises Renaissance Multi-Sector Fixed Income Private Pool, part of Renaissance Private Investment Program, see page 11. Contact your Renaissance sales representative for more details.

Bloomberg Markets magazine (2015 and 2012). 2 Forbes Magazine, “The Most Powerful People List”, November 5, 2014 http://www.forbes.com/powerful-people/. 3 Institutional Investor, www.usinvestmentawards.com, May 2013 and 2014. 4 Fortune Magazine Investor’s Guide 2012, December 26, 2011. DoubleLine® is a registered trademark of DoubleLine Capital LP. 1

Brazilian

Beauty

Take a walk on the wild side The 2016 Olympic Games in Rio de Janeiro, Brazil, will be the first time a South American country has hosted the games. That’s why we couldn’t pass up this opportunity to highlight the world’s fifth-largest country. Whether it’s the jungles of the Amazon or the thongclad crowds on the beaches, Brazil has a pulse-pounding rhythm all of its own.

Things to discover in Brazil, from the Olympics and beyond Before you go, get into the mindset of Brazil: it’s big, really big. It’s got big jungles, big statues and big festivals. It seems only small things in Brazil are the bikinis.

lining up for caipirinhas (Brazil’s national cocktail), and beach vendors hawking their wares. Each group stakes out its territory, creating a maelstrom of sights and sounds.

Brazil is the largest Portuguese-speaking country in the world, and is the only country in North or South America that speaks the language. Brazil

Of course, you can’t forget about the tanned beachgoers—they’re everywhere! But you won’t see anyone going topless as it’s not permitted on Brazil’s beaches, except in officially designated places throughout the region, like Tambaba beach. But whether the beaches are topless or not, the tiny Brazilian bikinis don’t leave much to the imagination. The Brazilian bikini is called a tanga, and the slang expression for it is fio dental (dental floss). Enough said?

is so big, it shares a border with all South American countries except for Chile and Ecuador, and covers three time zones. Around 60% of the Amazon Rainforest is located in Brazil. Acclimate Yourself What to pack when travelling to Brazil? If you’re planning on visiting during this summer for the Olympics, or at any other time of year, keep in mind that Brazil lies in the Southern Hemisphere. That means that the seasons are the exact opposite of what we’re used to: summer is December through March, and winter is June through September. Within the country the climate varies considerably from region to region. If you’re planning on travelling in the low season from May to September, temperatures are milder in the south. July to September are good months to visit the Amazon. In the shoulder season months of April and October, you can expect warm and dry weather along the coast, but can be chilly in the south. And the months of December through March are a hot, festive time featuring Carnival. Sun, Sand and Surf Brazil is all about beaches. The country’s shoreline is dotted with more than 2,000 beaches, and the most famous is Rio’s Copacabana Beach. This four-kilometre stretch of sand is a flurry of activity, with rambunctious soccer players belting out their teams’ anthems, locals and tourists

Adjacent to Copacabana, but on the other end of the figurative spectrum is upscale Ipanema Beach. Ipanema is one of the most expensive places to live in Rio. Considered the “little Paris” of Rio, the area is renowned for its modern galleries, restaurants and movie theatres. Remember the song “The Girl From Ipanema”? That ditty brought fame to the neighbourhood when its residents Antônio Carlos Jobim and Vinicius de Moraes sang about it in 1962. Amazon Jungle Lodges Brazil has its hotels, motels and pousadas (guesthouses) just like any other travel destination. But if you really want to experience Brazil in all its lush and jungle wildness, try an Amazon jungle lodge. The Amazon is the world’s largest and densest rainforest, with more diverse fauna and flora than any other jungle in the world. And Amazon jungle lodges cater to all sorts of travellers’ expectations about the rainforest: bountiful fishing, chattering monkeys and the pulsating silence of rainforest nights. Although the deepest heart of the Amazon Rainforest lays beyond the limits of jungle lodges, some of the tours provided by the lodges can bring you palpably close. Canoe tours in igarapés, the Amazon River’s narrow meandering canals, are an example of what you can do to have closer encounters with wildlife. Check what kind of tours each lodge has to offer and their cost before you choose an Amazon jungle lodge.

Olympics Bound Statue of Christ the Redeemer Away from the jungles and overlooking Rio, the 40-metre-tall statue of Christ the Redeemer sits atop the Corcovado peak. At 700 metres above the city, Christ keeps a watchful eye over its residents. The statue was voted one of the New Seven Wonders of the World in 2007. On a clear day, the views from the base of the statue are breathtaking. At night the statue is lit up and seemingly hovers over the city as the mountain it stands on is dark. If it is cloudy, the clouds light up and the effect can be quite spectacular and ethereal. Carnival: A Spectacle for the Senses The Amazon jungle has nothing on Brazilians when it comes to getting wild. A five-day celebration held 46 days before Easter and ending with the beginning of Lent, Carnival is seen as a farewell to pleasures of the flesh. The exotic barely-there costumes, the lavish parade floats and hipthrusting Samba music are all elements of this famous festival. Carnivals are celebrated in many countries but Rio’s is one of the most famous, with thousands of people wearing masks and colourful costumes thronging to the Sambodromo stadium in the city. Carnival in Brazil is a major holiday when people shut shops and come out on the streets to celebrate life. The festival is organized by various samba schools; but don’t worry, even if you have two left feet, you can still lose yourself and enjoy the events in all their splendour.

If you’ll be watching the Olympic Games live in Rio or from the comfort of your own home, here are the need-to-know facts that will keep you on top of the events. The 2016 summer Olympic Games will take place from August 5- 21 in 33 different venues throughout the Barra, Copacabana, Deodoro and Maracanã regions of Rio de Janeiro. Additionally, five venues in the cities of São Paulo (Brazil’s largest city), Belo Horizonte, Salvador, Brasília (Brazil’s capital) and Manaus will also see Olympic action. Highlights: Friday August 5 | Opening Ceremonies The ceremony will feature the final torchbearer and the lighting of the Olympic cauldron. Starting Saturday, August 6 | Gymnastics and Swimming These always-popular competitions get underway on Saturday, August 6, with the men’s all-around final on Wednesday, August 10, and the women’s all-around final on Thursday, August 11. Saturday August 13 | Track and Field Women’s 100-metre final Sunday August 14 | Track and Field Men’s 100-metre final Sunday August 21 | Closing ceremonies The Olympic cauldron will be extinguished at Maracanã Stadium.

For complete information on the 2016 Olympic Games, visit rio2016.com/en. Sources: factslides.com/s-Brazil sciencekids.co.nz/sciencefacts/countries/brazil.html frommers.com/destinations/brazil lonelyplanet.com/brazil/ rio-de-janeiro-travel-information.com

rio.com/practical-rio/ipanema-beach gobrazil.about.com viator.com/Rio-de-Janeiro-attractions calendarlabs.com/holidays/brazil en.wikipedia.org/wiki/2016_Summer_Olympics

Affluent Clients Deserve the Highest Level of Service THANKS TO OUR SUPPORTERS

Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians realize their investment goals. Here is one of the outstanding professionals we are so very proud to work with. What do you love about the business? Ultimately what I love the most is running my own business. If I wasn’t running a wealth management business, I would be running a business in another industry. I feel fortunate that I get to satisfy my two passions: running a business and managing investment portfolios. What is your personal formula for building strong client relationships? Strong client relationships are built on strong personal connections. Working with clients that you genuinely like makes this difficult work fulfilling. Of course, you also have to execute on the portfolio management side of the relationship. What are some of the most common client concerns you hear and how do you address them? Most of my clients are concerned about retirement income, taxes and estate planning. Many of the issues I help clients with have nothing to do with stocks, bonds, and mutual funds. Clients may also need help with softer issues such as business transition planning, caring for a disabled relative, or leaving a legacy. Are there areas or themes of financial or investment planning that you plan to focus on more in the future? I will focus on growth and my plan is to continue to add high-value relationships. I enjoy helping clients realize financial independence which allows them to focus their own interests. How do you deal with your affluent clients? Do you approach things differently with them than with other clients?

the high-net-worth sector and tailor my service model to meet the complex needs of these clients. I leverage a team of experts to deliver solutions to clients’ complex problems. Best tip for gaining new clients: Develop advocates for your service. Referrals are the best way to meet new prospective clients. It takes some time to develop a good reputation and that goodwill can open doors. Favourite hobbies: Being active. I belong to a great gym and enjoy playing hockey, golf and fishing. Exercise is also a good way to manage stress levels. What is the one item you can’t be without? A cottage weekend with my family.

Raymond G. Dubeau CIM Firm: Wood Gundy Location: Ottawa, ON Years in Business: 16 Team Members: 2

Absolutely. Affluent clients deserve the highest level of service. I focus on

brain calisthenics Word scramble – Unscramble the following letters to spell words from the article on pages 8-11:

Sudoku – Complete the Sudoku puzzle so that each and every row, column and 3x3 box contains the numbers one through nine only once.

1. tnafeulf

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3. nfrdsretrea

4. ervserpe

5. rttsus

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7. traieric

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1 Source: 4puz.com

Spot the difference – Can you spot the five differences between the pictures below?

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