The Renaissance Advisor by renaissancemag

Final print issue

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

Volat l ty Anyone? Preparing for the inevitable

The Renaissance Advisor is going digital this summer. See page 3 for details about our exciting new online solution.

Q1 â&#x20AC;&#x201C; MAR. 31, 2017

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In this issue

Economic Outlook 4 The Real Estate Landscape Tax and Estate 6 How to Invest a Tax Refund… Global Market Perspectives Opportunities in Surprising Places

Volatility Anyone? – Preparing for the Inevitable 8 Solution Highlight 11 Easier Access to Real Assets

Destination: Canada – Discovering Our Home and Native Land

Thanks to Our Supporters 15 Talk to Clients About the Bigger Picture Brain Calisthenics 16

8 12

From the Managing Director of the Renaissance Sales Team

Weathering Client Expectations Welcome to the spring edition of The Renaissance Advisor. The weather is heating up, but equity markets have been hot for several months. New competitors, increased regulation and market volatility are just some of the challenges driving up client expectations. However, your commitment to provide superior service and unbiased advice will benefit your clients and your practice. In this edition, we explore market volatility. Our experts share their insights and recommendations, and offer tips for your client conversations in Volatility Anyone?—Preparing for the Inevitable. If you’re planning your summer vacation, Destination: Canada—Discovering Our Home and Native Land explores several unique spots to visit from coast to coast in this, our 150th year. As always, we hear from our experts. Jamie Golombek advises on how clients can use their tax refund. Benjamin Tal discusses the heated Canadian real estate market and weighs in on the recent measures announced by Ontario policymakers regarding the Greater Toronto Area. The Solution Highlight is dedicated to the Renaissance Real Assets Private Pool. With exposure to real assets debt, infrastructure, real estate and natural resources equities, the pool offers clients stable income, potential for capital appreciation and inflation protection. Contact your Renaissance sales representative today for more information.

Finally, this is a bittersweet sign-off for the print version of The Renaissance Advisor as we move to a new digital content platform this summer. Thank you to everyone who shared their feedback in the fall 2016 survey. It has gone a long way to help create a modern digital solution with timely and relevant content. To ensure you continue to receive content to support your business, speak with your Renaissance sales representative or contact info@renaissanceinvestments.ca.

We thank you for your business and welcome your feedback.

Shelly McLean Managing Director, National Sales Renaissance Investments

The Real Estate Landscape What’s Next for the GTA?

economic outlook

40%

Index 2006=100

210 170

20%

130

10%

I can’t make a brief statement on the Canadian real estate landscape. It’s too complex. Comparing Canada to the pre-crisis U.S. market is wrong and irresponsible. Also, looking at Canada in absolute terms reveals a multidimensional market and differing directions at the same time. In reality, the market hasn’t yet been tested. Higher interest rates will likely expose well-hidden weaknesses. There is little doubt that due to ongoing activity in the real estate market Canadians are highly sensitive to the risk of higher interest rates. While these won’t lead to a wave of defaults, they could act as a major drag on overall economic activity. This is due to the impact on consumer spending (income is devoted to debt repayment) and potentially on job creation in real estate-related sectors. The recent softening in real estate activity in Vancouver is not mostly due to the introduction of the tax on foreign investment. It’s due to the fact that domestic players are still assessing the eventual impact of that tax. When the fog disappears it will be very clear that the real impact of that tax is not as significant as advertised. The market will adjust, but it may not be uniform. Different segments will be impacted at different intensities. Collectively it will be smoother and take longer to fully unload. It’s a multi-dimensional market. Spotlight on the GTA Housing Market The Greater Toronto Area (GTA) housing market’s trajectory is largely due to policy. Legislation-driven land constraints suggest we’re in a classic case of market failure. The GTA market requires a specific policy mix to prevent an affordability crisis. Ottawa’s impact is limited because national policies are too blunt to deal effectively with the GTA market. A foreign buyer tax will slow activity at the margin, but isn’t a solution. Changing the role of rental activity in the city’s housing mix is. The propensity to rent in the GTA must rise, and the market should realign to increase rental unit supply— specifically, purpose-built apartments. As rents continue to rise, it’s logical to increase the number of purpose-built projects. With incentives from municipalities, these rentals could mean a more affordable GTA housing market.

y/y chg

30%

Something Happened in 2016 50 06

0% -10%

81 86 91 96 01 06 11 16

Until 2016, strong demand combined with lack of supply generated a robust, but relatively predictable path of GTA house price appreciation. House price inflation acceleration in 2016 suggests other forces exist. The 17.3% increase in average prices in 2016 is the strongest seen since the late 1980s. 30,000 House Price Index – GTA 20,000

Average Sale Price (GTA) (Annual) 40%

Index 2006=100

210 10,000 170 0 130 Jan 06 90 50

y/y chg

Standing inventories

30% Jan 07

Jan 08

Jan 09 14

Jan 10 16

20% Jan 10%Jan 11 12 0% -10%

Jan 13

Jan 14

Jan 15

Jan 16

Jan 17

81 86 91 96 01 06 11 16

Source: Teranet/National Bank of Canada, CIBC

The fundamentals for strong price acceleration are still in place. Demand is

y/y chg 25% Accelerated activity stronger than perceived. thefrom households in the GTA by aheadData of LTTunderestimates Recovery 20% 30,000 recession roughly 60,000, as non-residents have been undercounted. 15% 10% 20,000 Also, 5% land prices for low-rise units continue to accelerate, and the lag factor suggests more is to come. 10,000 0% Standing inventories -5% 08 notable 09 increase 10 11 in the 12 price 13 of 14 15 units. 16 Different 2016 07 was the high-rise 005 in 06 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Condo prices rose by08close09to 16% 11 12 in the 13 fourth 14 quarter—the 15 16 17 06 07 10 (year/year)

largest gain since the 2010 recovery. A rapid acceleration in activity occurred in late 2007 before the land transfer tax introduction in Toronto. Medium Density – GTA Avg $/acre y/y chg 25% Accelerated activity $3,000,000 ahead of LTT Recovery from 20% recession 15% $2,000,000 10% 5% $1,000,000 0% -5% $0 2015 16 2016 05 06200707200808 2009 09 2010 10 2011 11 2012 12 2013 13 2014 14 15

Source: Altus Group, CIBC

4 Avg $/acre

Policymakers Respond: Our Thoughts on Ontario’s New Housing Initiative In April, the provincial government recognized that there is a need for a GTA-specific housing policy and acted on it decisively. To the right is a brief summary of our thoughts on the key measures. Overall, we expect the measures introduced in April to slow down activity in the GTA’s housing market in the near term, not only due to their direct impact but also due to the impact40% of the uncertainty regarding their y/y chg Index 2006=100 210 ultimate impact on potential buyers. 30% 170

For more details, read this report 20% for our full reaction to the specific 130 10% policies announced. 90 50

0% https ://economics.cibccm.com/economicsweb/cds?TYPE=EC_PDF&ID=2854 06

-10%

20,000

The condo market is actually undersupplied. About 27,217 new condo apartments were sold in the GTA in 2016—record year-over-year 10,000 Standinggrowth of inventories 34%. Supply isn’t increasing to meet increased demand. New condo launches 0 last yearJan wereJan downJan 6% and unsold inventories fell 50% to a 10-year Jan Jan Jan Jan Jan Jan Jan Jan Janlow. 11 is leading 08 12 13 14 15condo 16 activity 17 06 07 10 area The lack of suitable lots in09the 416 to increased in the 905 area. In 2017, the 905 area will probably overtake the former City of Toronto in condo sales.

Accelerated activity ahead of LTT

Recovery from recession

Empty Unit Tax: A very reasonable and overdue move, with a marginal impact at best. Empty Land Tax: … might be very difficult to implement without a high level of cooperation with municipalities. Speeding up the Approval Process: Overall, a positive move. Rent Control: The one element in the package that appears to be problematic.

targets should be shelved. Also, while imposing a foreign buyer tax softens activity, it won’t be a game changer. Foreign buying in the GTA is notably lower than in Vancouver. Even there, the introduction of a tax didn’t have a direct impact on the softening in activity. In large part, it reflects reduced activity by domestic buyers as they assess the eventual impact of the tax. It’ll become clearer that the direct impact of the tax wasn’t as significant as perceived. Also, as activity stabilizes, buyers will likely return to the market. The Rental Option GTA municipalities must rethink the role of rental activity in their housing mix. The GTA rental market has never been hotter. With the propensity and composition of rental activity changing, the condo market can’t be renters’ only option. New renters need the stability of long-term renting with purpose-built developments. Two years ago there were less than 2,000 of these under construction. Today there are more than 5,000—over 16% of new rental supply. That number will be much larger in coming years. As of the fourth quarter of 2016, there were almost 28,000 purpose-built units.

Average GTA Condo Price y/y chg

F oreign Buyers’ Tax: A step in the right direction. The motivation here is to improve on the tax introduced recently in Vancouver.

81 86 91 96 01 06 11 16

Land prices appear to be the trigger and also led to the rapid rise in the price of low-rise units. Land for high-rise projects in the GTA is getting scarce. Parking lots, for example, aren’t available and builders have to be creative 30,000 finding suitable development lots.

25% 20% 15% 10% 5% 0% -5%

anning Assignment Flipping: A reasonable move that will do B little to change the situation.

Source: Urbanation, CIBC

It’s hard to fully explain the surge in prices in 2016 based on these fundamentals. With close to a 20% rise in house prices in one year, increased speculative and flipping activity is contributing to that trend. Policymakers must intervene. Avg $/acre $3,000,000

GTA-Specific Policies $2,000,000

And they have. It’s too early to assess the effectiveness of the policy changes $1,000,000 Ottawa introduced in October 2016. At the margin, they’ll work to slow mortgage activity. However, the impact won’t be dramatic. National policies are very $0 limited in their2007 ability2008 to deal2009 with 2010 the GTA’s Those 2015 changes are 2011specific 2012 issues. 2013 2014 2016 aimed at a shrinking target—the market’s insured segment. We need GTA-specific policies (see our reaction to specific policies announced in April above). Proposed amendments to the region’s intensification and density

A large supply of purpose-built developments will help solve the GTA’s rental needs and developers will need incentives from municipalities. With a full-blown affordability crisis approaching, the GTA market may be tested further if interest rates rise and the economy faces a recession. Policymakers can make a difference. 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/

How to Invest a Tax Refund… and Avoid Getting One Next Year!

Tax AND Estate

It’s spring and many Canadians are anticipating a tax refund. Here are some strategies to help your clients get the most from their refund. They’ll also be in a better position next spring by not getting refunds in the first place!

Ideally, a refund would be used to increase net worth, by paying off debt and topping up tax-advantaged savings plans. But, if the refund isn’t enough to cover these strategies, which one is best? Debt bearing a high interest rate, such as credit card balances, should generally be tackled first. The remaining funds could be invested in an RRSP or TFSA—both providing tax-sheltered investment income—or to pay down any mortgage outstanding. Your client’s choice will depend on factors such as current and expected tax rates, rate of return on investment and interest rate on debt. Another factor is when the funds will be needed in the future. Perhaps the best advice, however, is to avoid getting a refund in the first place. A tax refund is really just a sign of poor tax planning. After all, it essentially means lending hard-earned money to the government, interest-free, for as long as 16 months! A tax refund typically arises when the amount of tax owing for a year is less than the amount of tax withheld from income. Employment income is the most common type of income from which tax is deducted at source. That’s why employees are most often the ones who get significant tax refunds. There are two primary ways to avoid getting a tax refund for 2017: updating federal and provincial TD1 forms and requesting a tax reduction at source, using CRA Form T1213. Form TD1, “Personal Tax Credits Return,” along with its provincial or territorial equivalent, is filed with the employer. This form lists the various credits to

which the employee is entitled, such as the basic personal amount, the disability amount and the spouse or common-law partner amount. CRA Form T1213, “Request to Reduce Tax Deductions at Source,” may also be completed, listing various deductions that may be claimed when filing an income tax return. These include RRSP contributions, deductible spousal support payments, interest on money borrowed for investment or business purposes or childcare expenses. The more credits and deductions that can be claimed on these forms, the less tax will need to be withheld from each paycheque. Letting your clients know about using one or both of these methods should help keep them from becoming interest-free lenders to the government.

“ Perhaps the best advice...is to avoid getting a refund in the first place. A tax refund is really just a sign of poor tax planning.”

Jamie Golombek is Managing Director, Tax and Estate Planning, CIBC Wealth Strategies. He works closely with advisors to help them provide integrated 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/

Opportunities in Surprising Places Global Market Perspectives

Every day seems to bring a new, sensational headline covering something U.S. President Trump has said or done. Analysts and forecasters then scramble to explain what it means and what will happen next. They dissect whether it’s a positive or a negative for the economy and for your clients’ investments. Meanwhile, despite the attention-grabbing events and confusion over what to make of it all, global stock markets continue to rise. Perhaps this is really not surprising because, when we look past the noise, we see a global economy that continues to improve. Our economic forecasts show that the U.S. economy should continue to grow at a decent pace. In fact, the U.S. is expected to grow at a rate above its long-run average, and create more jobs for Americans along the way. What we are now considering is whether financial markets have already priced this in. Our growth forecasts are lower than many other economists and one worry is that “the other guys” could eventually be forced to lower their numbers.

will likely delay needed action. However, even without that boost, the European economy is showing signs of improvement. Earnings and sales have rebounded and in fact are now growing strongly.

“ ...the European economy is showing signs of improvement. Earnings and sales have rebounded and in fact are now growing strongly.” While the U.S. is in the late phase of its economic and earnings cycle, Europe is still recovering from years of weak growth. Higher interest rates and higher employee wages are not an immediate threat for European companies, as they are in the United States. In addition, European stock market prices have already factored in some of Europe’s economic and political challenges and stock prices are sitting at more attractive levels as a result. Obviously, European equities would be at risk if another political crisis emerges, but right now they offer good potential for “catch-up” growth at a reasonable price.

“ Our growth forecasts are lower than many other economists and one worry is that “the other guys” could eventually be forced to lower their numbers.” We’ve noted before that with interest rates rising, the economy is losing a former propellant that must now be replaced by another form of stimulus to keep growth healthy. That stimulus can come from government, or fiscal, spending and this is where investors hope Trump will be able to make good on campaign promises and not stumble. This helps to explain why Trump’s difficulties in securing a repeal of Obamacare and other administration setbacks make financial markets nervous. They raise the question: Can Trump really deliver what he has promised? A related situation is unfolding in Europe, with important differences. European economies are also in need of government help, but the hurdle of upcoming elections in France and Germany, not to mention Brexit negotiations,

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 Executive Summary For the 12-month period beginning April 1, 2017

Equities versus Fixed Income • With a continued economic expansion and interest rates facing gradual upward pressure, equities should remain slightly more attractive than bonds.

Loonie and Greenback

A TRICKY BALANCING ACT Despite the enormous number of headlines focused on U.S. President Trump, the global economy continues to improve in the background. As a result, equity markets have been well supported and continued to push higher. Bond yields have stabilized after their sharp rise in late 2016. Under our somewhat benign global outlook—we project around 3% global growth over the next 12 months—central banks will be left to manage a difficult balancing act. Following years of aggressive monetary stimulus, the question of scaling back this support may have unintended consequences. This will be a risk to monitor over the coming year.

• The Bank of Canada is likely to continue with easy monetary policy while the U.S. Federal Reserve raises rates. This widening differential could potentially push the loonie to 0.73 USD over the next 12 months. • We expect limited and selective U.S. dollar strength while certain emerging market currencies could provide attractive returns.

Regional Markets • U.S.: We remain skeptical about the ability of the new Trump administration to enact meaningful stimulus in 2017, given the existing budget constraints and the complexities of health care and tax reform in general.

Go to renaissanceinvestments.ca to read the full Perspectives report

• Europe: European equities currently offer good potential for catch-up growth at a reasonable price. • Emerging Markets: Emerging Asian equity markets remain attractively valued and our preferred global equity region. • Canada: While we are still constructive on Canadian equities, the risk/reward proposition is no longer as compelling.

renaissanceinvestments.ca/en/economy/

Volat l ty Anyone?

Preparing for the Inevitable

Patrick O’Toole Vice-President, Global Fixed Income CIBC Asset Management

Luc de la Durantaye Managing Director and Head, Asset Allocation and Currency Management CIBC Asset Management

Larry Antonatos Managing Director, Portfolio Manager Brookfield Asset Management

For the first time ever, the Dow Jones Industrial Average hit 20,000 in January 2017. Markets also enjoyed strong performance over the last several months. However, that doesn’t mean portfolios are protected from bumpy times ahead. Potential triggers include upcoming European elections and President Trump’s agenda. Keeping this uncertain environment in mind, our economic and market experts reveal their top messages when looking at how to best position client portfolios.

Peter Hardy Vice-President, Client Portfolio Manager American Century Investments (ACI)

Colum McKinley Vice-President, Canadian Equities CIBC Asset Management

Benjamin Tal Deputy Chief Economist CIBC World Markets

Inflation Fears for Fixed Income Patrick O’Toole

On the fixed income side, de la Durantaye believes government bonds remain relatively overvalued, so he maintains a bullish view on corporate and high-yield bonds. Like O’Toole, he suggests that advisors maintain balanced portfolios for their clients.

“Inflation is always a fear for investors in the bond market,” says Patrick O’Toole. Those fears have grown recently as the U.S. employment market has recovered and wages continue to rise. If inflation were to accelerate, the U.S. Federal Reserve would likely become more aggressive in raising its key interest rate, and bond yields would rise in lock-step. However, O’Toole believes that inflationary pressures may be peaking. As the impact from last year’s low oil prices recedes, companies are finding it difficult to pass on higher costs.

Trump Policies May Fuel Infrastructure

Given recent concern about rising inflation or stronger growth, O’Toole isn’t making any material changes to his portfolios. He expects growth to improve compared to 2016, but to be lower than consensus expectations. “That should allow bond yields to remain in the range that has prevailed for the past several years and result in corporate bonds outperforming government bonds,” says O’Toole.

Infrastructure projects provide the literal and metaphorical building blocks on which countries and continents construct their economies. Investing in, and developing infrastructure help countries to generate jobs, improve the quality of life for their population and boost economic growth. However, the United States, despite its position as the world’s biggest and most innovative economy, suffers from a gap in infrastructure investment.1

In light of these challenges, O’Toole suggests advising clients to stay the course. Maintaining balanced portfolios should help mitigate volatility and provide for growth. “But we have to adapt to the reality that slower economic growth means lower returns for all asset classes,” says O’Toole. Also, don’t forget the magic of compound interest from bond coupons and stock dividends. “Over the long term, compound interest accounts for two-thirds of fixed income returns,” O’Toole says. What are O’Toole’s words of wisdom? “It’s easy to say, but embrace volatility.” Patient investors have the opportunity to be rewarded. Part of the legacy of post-crisis periods has been heavy intervention by central banks and governments. The result: low volatility and a distortion of market prices. When central banks and governments allow market forces to determine prices, companies are more likely to deploy capital in areas that should help grow economies.

Opportunities in Emerging Markets Luc de la Durantaye Luc de la Durantaye is keeping an eye on the gradual transition of monetary and fiscal policy initiatives. A miscalibration of these policies could spur volatility. Over the past several years, central bankers have tried to counteract deflation and support financial markets. However, central banks have now run out of room to manoeuvre because of policy limits, and normalizing monetary conditions. Janet Yellen, Chair of the U.S. Federal Reserve (the Fed), believes that stock valuations are quite high. The Fed could let markets correct without immediately promising looser monetary policy conditions, which could mean increased market volatility. What’s de la Durantaye’s current investing mindset? “Given the high degree of uncertainty, we have struck more of a balance between equities and fixed income,” he says. In terms of equities, he is more bullish on emerging markets over the United States. This is because valuation highly favours emerging markets over time, and growth is stabilizing in the emerging markets.

Larry Antonatos Infrastructure investing is going to be a very strong theme in 2017, says Larry Antonatos.

Antonatos believes three Trump policies will affect infrastructure investing: fiscal stimulus, reduced regulation and U.S. energy independence. Infrastructure can effect fiscal stimulus through the construction and maintenance of largescale infrastructure projects, which require significant material and labour. This will create high consumption and many jobs. Reduced regulations could also lead to increased infrastructure investing. Trump’s plan to eliminate some regulations could translate into quicker approval for new infrastructure projects. Finally, Trump’s intention of making America independent from the OPEC cartel would accelerate the production of oil and gas in the United States. This, in turn, would increase demand for existing pipelines and create demand for new pipelines. “It could be a tremendous source of growth for the energy infrastructure sector and would also be positive for all areas of the energy industry,” Antonatos says.

U.S. Corporate Tax Cuts Could Boost Stock Markets Peter Hardy Trump’s promised tax cuts could potentially help with corporate bottom lines and give a major boost to the stock market. Trump has said he is looking to knock the corporate tax down from 35% to 15%. Standard & Poor’s Global Market Intelligence estimates that slashing the U.S. corporate tax rate could boost the market by about 11%.2 Peter Hardy is closely monitoring changes in U.S. corporate tax rates, which helps him determine the impact on valuations of companies held in ACI’s portfolios. “The resulting increase in after-tax free cash flow will benefit those companies with the highest corporate tax rates,” Hardy says. “That’s another theme we are looking at within our universe of companies. We need to be aware of those companies with higher tax rates and the potential benefits from reduced tax rates.”

Small caps could potentially outperform by benefitting from Trump’s policies. Many small-cap companies pay higher tax rates than large caps. This is because the larger-cap companies can reduce their taxes through offshore operations. Consequently, many of the larger multinationals have lower tax rates while smaller, domestic U.S. companies have higher tax rates,” Hardy adds. He recommends keeping an eye on how promised corporate tax cuts may affect company valuations, and how that might expose opportunities.

Find Bargains in Canadian Equities

Smoothing Out Volatility Conversations

Colum McKinley Colum McKinley worries that despite signs of an improving economic outlook, the economy remains fragile with ongoing uncertainty. So, he continues to closely monitor corporate results and other factors that could disrupt the improving economic landscape. McKinley also sees today’s uncertainty as an opportunity. In managing his portfolio, McKinley seeks situations where investors overreact. “This enables us to accumulate positions in high-quality companies at attractive prices,” McKinley says. He has tilted his portfolio positioning towards higher-quality companies with strong dividends to provide additional downside protection. He encourages advisors to keep a long-term perspective and use volatility to their clients’ advantage. He quotes Warren Buffett: “Be greedy when others are fearful, fearful when others are greedy.” It’s a reminder that periods of volatility are usually a good time to buy high-quality companies at bargain prices.

Canadian Economy Likely to Lag Benjamin Tal “At this point, it appears that the United States will outperform Canada in 2017,” says Ben Tal. “This wouldn’t really be a result of Trump’s policies, where the main impact will be felt in 2018. It’s really due to the weakness of the Canadian economy.” Even though the energy sector is well positioned for more growth (due to rising oil prices, the weak loonie and improved prospects for pipelines), the main benefit will be energy company profits as opposed to real production and investment activity. The oil sector needs higher and stable oil prices to start drilling again. In addition, the rotation from energy to non-energy export activity in Canada will take longer than expected. This is due to capacity constraints as well as reduced demand from the U.S. manufacturing sector as it adjusts to the ongoing strength of the American dollar. At the same time, it’s reasonable to expect another solid year from American consumers, given still elevated pent-up demand and higher wage growth as labour market activity remains strong. Tal expects GDP growth in Canada to average 1.7% in 2017 compared to an average of 2.2% in the United States, led by British Columbia and Ontario. Sources: 1 https ://www .financierworldwide.com/infrastructure-investment-in-the-us/#.WN5vxuTHc2w 2 http ://www .cnbc.com/2016/12/01/standard-and-poors-trump-tax-cut-could-produce-eye-popping-stock-gain.html

Advisors who act as the voice of reason have the best opportunity to retain client assets and uncover new business potential. This is especially important during times of market volatility. Remember these actions when you talk to clients who are worried about volatility.

1 Identify, Align, Agree Maintain rapport with your client. Explain that you understand their nervousness, and assure them that a lot of other investors are feeling the same way. Many troubled clients simply want their emotions acknowledged.

2 Apply a Quality Control Check Use historical evidence with a compelling visual to illustrate that bull markets have consistently been longer and stronger than bear markets. Remind your client that taking advantage of the tremendous wealth-building opportunities in equities requires remaining prudently invested. But they must also be willing to experience some volatility along the way.

3 Make a Specific Recommendation About Your Client’s Portfolio An example would be: “Remember that your portfolio has been built using prudent asset allocation principles, and is designed to minimize risk during volatile times. In light of what we discussed today, I recommend that we stay the course. This way, we’ll be there for the opportunity to grow your wealth and to prepare you for retirement.”

Easier Access to Real Assets SOLUTION HIGHLIGHT: Renaissance Real Assets Private Pool

We’ve made it easier for clients to benefit from real assets in their investment portfolios. The Renaissance Real Assets Private Pool’s minimum initial investment threshold was reduced to $10,000 from $150,000. The pool offers clients access to:

Shifting Institutional Investor Asset Allocations Smart money understands the opportunity 5%

Portfolio Allocation in 2000

Equities

Multiple Real Assets Sectors in One Investment: A single, multi-strategy portfolio that provides exposure to infrastructure equity, real estate equity, real assets debt and natural resources equity. Integrated Tactical Management: Structured to allow for movement within these sectors based on a relative value assessment of the best opportunities. This allows for potentially enhanced returns and helps manage overall portfolio risk. Superior Management Expertise: Brookfield Asset Management Inc. is a leading global real assets manager.

MER

We’ve also lowered target MERs in our Renaissance Private Investment Program in order to offer clients increased value. Go to renaissanceinvestments.ca

95%

Fixed Income

Portfolio Allocation in 2016

52%

Equities

21%

Real Assets

27%

Fixed Income

The Canada Pension Plan (CPP) Investment Board $278.9 billion | as at March 31, 2016

CIBC Asset Management Inc. intends to waive management fees or absorb expenses effective March 1, 2017, which should result in lower Management Expense Ratios (MERs). The practice of waiving and/or absorbing management fees and operating expenses may continue indefinitely or may be discontinued at any time without notice to unitholders. This material was prepared for investment professionals only and is not for public distribution. It is for informational purposes only and is not intended to convey financial, investment, legal, tax or accounting advice. Renaissance Investments and Renaissance Private Investment Program are offered by CIBC Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. To obtain a copy of the Renaissance Private Pools simplified prospectus, call 1-888-888-FUND (3863). Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Distributions are not guaranteed and may fluctuate and should not be confused with a fund’s performance, rate of return, or yield. Distributions paid as a result of capital gains realized by a fund and income and dividends earned by a fund are taxable in the year they are paid. ™Renaissance Private Investment Program is a trademark of CIBC Asset Management Inc. ®Renaissance Investments is a registered trademark of CIBC Asset Management Inc. The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc.

DESTINATION: CANADA

Discovering our home and native land

As our country celebrates the 150th anniversary of Confederation this year, it’s being heralded as the place to be in 2017. The Lonely Planet placed Canada at the top of their list of must-see destinations. In our glorious past, a bold group of early settlers—the legendary voyageurs— portaged their way across Québec to find furs, work and camaraderie. Like these adventurers before us, you can awaken your inner explorer and visit the many wonders that Canada offers from coast to coast. Here is just a sampling of destinations in our beautiful and varied country.

The striking landscapes of Agawa Canyon By late September, the Agawa Canyon’s hardwood forests are filled with autumn colours. These striking landscapes are among those captured on canvas by the Group of Seven in the early 20th century. Group of Seven member Lawren Harris even outfitted a boxcar for fall painting expeditions. These remote landscapes aren’t inaccessible. The most convenient and popular way to see the canyon is by the Agawa Canyon Tour Train. The train departs daily from Sault Ste. Marie and travels just over 100 miles into wilderness. At the Canyon Park stop you can explore several easy walking trails and nearby waterfalls. You can also visit the lookout, which is 372 steps above the canyon. While the canyon is open year-round, late September through early October is the best time to visit the sites that inspired the Group of Seven. In winter, you can go ice climbing on the 575-foot-high granite canyon walls. Just keep in mind that experience is required to climb these ice-covered canyon walls!

Ontario

Raw nature in Churchill There aren’t any paved roads leading into the tiny town of Churchill. So, you’ll have to arrive by train or plane to see the area’s most famous seasonal residents—polar bears. From July to November, about 1,000 of these migrate to Churchill, nicknamed the “Polar Bear Capital of the World.” The most popular time to see polar bears is from mid-October to the end of November. Ride in a custom-built tundra vehicle to get the best view of migrating polar bears. Summertime also brings thousands of migrating beluga whales to the town’s coast. Churchill’s human population of about 1,000 is outnumbered by the whales, three-to-one. Summer season is from early July into early September, when beluga whales show up by the thousands in Churchill River estuary.

manitoba

Time travelling in L’Anse aux Meadows Located at the edge of the Great Northern Peninsula, this is where Vikings first settled in North America. Step back 1,000 years while you visit the re-created ancient settlement. This UNESCO World Heritage Site will help you better understand the lives of these early settlers. Visit the interpretive centre, take a guided tour of the Viking ruins and visit the longhouse to discover what life was like here in 1000 A.D.

Newfoundland

Cruising Canada’s Inland Waterways

A foodie’s paradise on the Gourmet Route

quÉbec

Tour through the spectacular countryside and discover Québec’s unique and delicious food and drink. From the farmer’s field to the kitchen table, you can taste the passion of artisan producers and culinary chefs along the Gourmet Route. Drive through the world biosphere reserve of Charlevoix and breathe in the aroma of lush orchards bursting with midsummer fruit. Quench your thirst with an ice-cold fresh-pressed cider while enjoying breathtaking views of the St. Lawrence River. In Québec City, find out how a rich culinary tradition grew from the first settlers. Then settle in at a local restaurant to feast on smoked bison, traditional meat pie and duck breast. Over the past 10 years, the Gourmet Route has become the first farm-to-table tour in the Capitale-National region. Here, your gourmet tour goes beyond the fine cuisine experience. It includes culinary activities, agrotourism and opportunities to recognize the talent and know-how of local artisans.

Nature’s spa in Liard River Hot Springs Provincial Park Walk down a wooden boardwalk path through a warm-water swamp and boreal forest to soak in Canada’s second largest hot springs. Liard River Hot Springs Provincial Park consists of about eight pools, one of which is open to bathers. The thermal waters simmer between 42° and 52°C in the rustic public pool, which is a popular rest stop for drivers on the nearby Alaska Highway.

British Columbia

The park, pool and highway are open year-round, and all three are busiest in the summer. For a truly unique Canadian experience, go in the winter. The forest is covered with snow and frost builds steam off the water—a magical scene for an evening soak. Drive a half hour south of the park to overnight at Muncho Lake. This can be your home base while you trek the wilderness on a pristine, remote fly-in fishing adventure or bushpilot flight.

Canada-wide: Free 2017 Parks Canada Discovery Pass There’s even more to discover! Did you know there are 46 national parks, 168 historical sites and four national marine conservation areas throughout Canada? And this year is your chance to see them all—for free. As Canada's gift to you, the 2017 Discovery Pass will provide free admission for the entire year to Parks Canada locations from coast to coast. Order your pass online at www.pc.gc.ca/en/index

Have you thought about taking a cruise? If you’ve tried the big ships, or haven’t cruised at all, try cruising inland waterways for a unique experience. The vessels—carrying as few as 10 guests and up to a maximum of 200—provide a more intimate affair. The smaller size allows you to enjoy a higher staff-to-guest ratio and greater attention creating a very personal experience. And, while ocean cruises take you to a country’s coastline, inland cruises take you through a country’s heartland. This allows you to connect more completely with the culture. Here’s a sampling of cruises you can take in Canada:

Canadian Maritimes and St. Lawrence Seaway Eastern Canada offers up some magnificent landscapes. You can enjoy a river cruise to visit Victorian-style Montreal or search for Green Gables in Charlottetown. If you’re interested in disasters of the sea, you can see artifacts of the Titanic wreckage in Halifax at the Maritime Museum of the Atlantic.

Coastal and inland British Columbia Perhaps exploring British Columbia on a yacht that holds just 22 guests is more your speed. Travel the Strait of Georgia to the chain of the Harmony Islands, Jervis Inlet and Princess Louisa Inlet. Savour the sights, sounds and activities— everything from isolated sandy beaches to charming towns to kayaking in fjords. Sources: http ://www .nationalgeographic.com http ://caen-keepexploring.canada.travel/things-to-do/exp/quebec%E2%80%99s-gourmet-route# /?galleryItemId=200010002 http ://www .parcoursgourmand.com/eng/gourmet-route.asp http ://www .northernrockieslodge.com/bushpilotadventure http ://www .commandesparcs-parksorders.ca/webapp/wcs/stores/servlet/en/parksb2c http ://www .covingtontravel.com/2014/09/why-is-river-cruising-so-popular/ http ://usarivercruises.com/cruise/canadian-maritimes-st-lawrence-seaway/ http ://www .fodors.com/cruises/news/photos/10-best-river-cruises-for-2016 https ://www .adventuresmithexplorations.com/british-columbias-yachters-paradise#overview

Talk to Clients About the Bigger Picture 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?

Best tip for gaining new clients?

My passion is serving my clients’ wealth needs. I’m in the business of uncovering their money matters through financial and retirement planning—this is both exciting and challenging.

I gain a large number of clients through referrals. I also invest time in prospecting events and seminars.

What is your personal formula for building strong client relationships?

Favourite hobbies?

I’m committed to providing quality service because that’s what clients demand. Maintaining open communication also helps build trusting relationships. This is critical because a client’s wealth is a very personal thing. What is your clients’ number one concern and how do you address it?

I have a number of hobbies. Most recently, I've taken an interest in digging deeper into global events (i.e. U.S., China, India and Europe). What is the one item you can’t be without? I need regular physical activity because, first and foremost, I need to be healthy.

Clients are concerned about performance. I’m patient and understanding when I address questions about returns. I help them to look beyond the numbers and emphasize their long-term goals and how I’m going to get them there. With the current market and political uncertainties, how do you help your clients manage volatility? I talk to clients about the big picture, rather than about the short-term pain caused by bearish markets. Certain strategies—such as dollar-costaveraging—also help to illustrate how investing regularly can help mitigate market volatility. With concerns about volatility, are there any specific asset classes or sectors that you would highlight to your clients? I search for opportunities that may result from current economic and political conditions. For instance, political concerns in the U.S. are uncovering potential opportunities in the health care and technology sectors.

Chris Li

B. Sc., CFP Director, Private Client Group Senior Investment Advisor

Firm: HollisWealth Location: Scarborough, ON Years in Business: 35+ Team Members: 4

brain calisthenics Word scramble – Unscramble the following letters to spell words from the article on pages 8-10:

1. mbuyp

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

1 9

2. pkanegi

3. magtitei

4. gerede

5. bsoto

6. onsnuotcmip

7. nkkoc

8. tcerearov

9. lilndigr

10. oleitlav

5 1

6 3

7 3

8 8

8 4

5 3

Source: 4puz.com

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

Check your answers at renaissanceinvestments.ca/magazine/answers/ 16

FOR ADVISOR USE ONLY Renaissance Investments, Axiom Portfolios and Renaissance Private Investment Program are offered by CIBC Asset Management Inc. The views expressed in this document are the personal views of the authors and should not be taken as the views of CIBC Asset Management Inc. This document is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice, it should not be relied upon in that regard or be considered predictive of any future market performance, nor does it constitute an offer or solicitation to buy or sell any securities referred to. The information contained in this document has been obtained from sources believed to be reliable and is believed to be accurate at the time of publishing, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions and estimates expressed in this document are as of the date of publication unless otherwise indicated, and are subject to change. Any information or discussion about the current characteristics of the funds or how the portfolio manager is managing the funds that is supplementary to information in the prospectus is not a discussion about material investment objectives or strategies, but solely a discussion of the current characteristics or manner of fulfilling the investment objectives and strategies, and is subject to change without notice. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Certain information that we have provided to you may constitute “forward-looking” statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or achievements to be materially different than the results, performance or achievements expressed or implied in the forward-looking statements. ™ Renaissance Private Investment Program is a trademark of CIBC Asset Management Inc. ® Renaissance Investments, Axiom and Axiom Portfolios are registered trademarks of CIBC Asset Management Inc. The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc.

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A global, multi-sector fixed income mandate from acclaimed DoubleLine® bond manager Jeffrey Gundlach is available on an exclusive basis to Canadian investors: • Tactical allocation – Designed to capture opportunistic gains from market fluctuations • Active duration management – Can help contain risk in all interest rate environments • Diversified sources of yield – Access to a broader range of fixed income securities Contact a Renaissance representative at: 1-888-888-FUND (3863) or

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(1) Bloomberg Markets magazine September 5, 2012, October 5, 2015 and September 22, 2016. 50 Most Influential magazine editors favour recent accomplishments above lifetime achievements to build their list. They rely on the rankings, profiles, and cover stories they publish throughout the year in Bloomberg Markets. (2) Forbes Magazine, November 24, 2014 - “Glory To The New Bond King” (3) Institutional Investor. www.usinvestmentawards.com May 2013. Manager winners are selected by the editors of the magazine based on the results of a survey conducted of U.S. institutional investors. DoubleLine® is a registered trademark of DoubleLine Capital LP. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. To obtain a copy of the Renaissance Investments family of funds simplified prospectus, call 1-888-888-FUND (3863). Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. ®Renaissance Investments is offered by, and is a registered trademark of, CIBC Asset Management Inc.

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Renaissance Investments and Renaissance Private Investment Program are offered by CIBC Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. To obtain a copy of the Renaissance Private Pools simplified prospectus, call 1-888-888-FUND (3863). Alternatively, you may obtain a copy from your advisor. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. â&#x201E;˘Renaissance Private Investment Program is a trademark of CIBC Asset Management Inc. ÂŽRenaissance Investments is a registered trademark of CIBC Asset Management Inc. The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc.*Refer to the simplified prospectus for more information on Management Fee Reductions, family account linking and multiple purchase options. 02001E(201705)