The Renaissance Advisor by renaissancemag

The Renaissance

Advisor

QUARTERLY FUND PROFILES / PRACTICE MANAGEMENT / OUTLOOK / OPINION

The Roadshow Roundtable Before they hit the roadshow circuit, a few of our experts open up on some tough topics LIVE BETTER

Suit Yourself – Dress for Success BACK OF THE NAPKIN

Mastering HNW Seminars – attract, captivate and motivate a wealthy audience

Q2 – JUNE 30, 2012

WE’RE BRINGING

THE FUTURE OF INVESTING INTO PERSPECTIVE

Uncertainty is the new certainty.

Know the score. Gain the advantage. Take advantage of the new certainty with the Renaissance Optimal Income Portfolio – an all-in-one income generation solution with proven 1st quartile performance in volatile markets.

1st Quartile Performance

1 yr.

2 yrs.

3 yrs.

Since Inception3

Renaissance Optimal Income Portfolio1 Quartile Ranking2

3.3% 2nd

7.6% 1st

3.3% n/a

Go to www.renaissanceinvestments.ca/oip 1

Performance as at June 30, 2012.2Source: Morningstar, for the periods specified ending June 30, 2012 for Class A units of the Renaissance Optimal Income Portfolio. ©2011 Morningstar Research Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Quartile rankings are determined by Morningstar Research Inc., an independent research firm. Quartile rankings are comparisons of the performance of a fund to other funds in a particular category and are subject to change monthly. The quartile ranking reflects performance of Class A. The quartiles divide the data into four equal segments expressed in terms of rank (1, 2, 3 or 4). The top 25% of the funds in a category are in the first quartile and the next 25% are in the second quartile. This Fund is categorized as a Canadian Fixed Income Balanced fund. For each period, the quartile performance and the number of funds in this category are as follows: 1 year, 2nd quartile, 200 funds; 2 years, 1st quartile, 183 funds; and 3 years, 1st quartile, 151 funds. For more details, see www.morningstar.ca. 3Inception date: November 13, 2007. Please read the Renaissance Investments family of funds Simplified Prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Renaissance Investments is offered by CIBC Asset Management Inc. ™Renaissance Investments and “invest well. live better.” are registered trademarks of CIBC Asset Management Inc.

www.renaissanceinvestments.ca

PAGE

In this issue

8 11 148

RENAISSANCE INVESTMENTS

Tax and Estate Willpower

Economic Outlook Not There Yet

Back of the Napkin Mastering HNW Seminars

Invest Well The Roadshow Roundtable

Solution Highlight High Income + High Historical Outperformance

Thanks to Our Supporters Flying with Integrity

Axiom Portfolios Profiles Portfolio Essentials Performance Summary

14 32 34

Renaissance Investments Fund Profiles New Funds Money Market Funds Fixed Income Funds Balanced Funds Equity Income Funds Canadian Equity Funds U.S. Equity Funds Global Equity Funds Specialty Funds Fund Essentials Performance Summary

36 38 46 54 68 72 80 86 94 126 140 146

Live Better Suit Yourself â&#x20AC;&#x201C; Dress For Success

148

Brain Calisthenics

151

Letter from the National Sales Manager

Inflation protection just like house insurance As summer draws to a close, it is my hope that you have spent plenty of time with family and friends and have enjoyed all that the warm holiday season has to offer. Now back to our clients and what we need to be concerned with going forward. I speak many times about relationships and how to build better rapport with your clientele and gain new prospects. We have very rarely spoken of product and investment ideas in this space. This time, I will venture into new territory as I believe we have an important message for you that you can share with your clients. One of the central themes you will hear at the Live & Interactive events this fall is inflation. That may surprise you. Many of you will debate whether inflation is imminent, not coming for the foreseeable future or maybe even argue deflation is more of an issue. Regardless of your perceptions, your clients are reading about it in the media almost on a daily basis and are looking for some reassurance around this topic. I would argue that preparing for inflation and protecting purchasing power is a little like having house insurance in case of fire. You hope you never have to use it, but you feel much better having coverage and wouldn’t think of being without some form of protection “just in case” a fire occurs. I believe that the same holds true for inflation. Whether it is upon us now or will be in the future, a discussion with your clients should be part of any meeting. It can be educational, as is Ben Tal’s Inflation 101 video on our website, and should make a recommendation as to how to be protected should inflation begin to grip our economy. There has been a tremendous amount of stimulus injected into economies globally and the fear of inflation is in the back of everyone’s mind. Why not be proactive and discuss this concept with your clients. They will understand the issue and be appreciative of the proactive nature of your advice. (As an aside, the Renaissance Optimal Inflation Opportunities Portfolio is an excellent investment tool for assisting with the inflation issue.) I would encourage you to think of inflation with your clients and the impact that it may have on their investment portfolios. Consider that a low inflation rate at this time in history, with very low 10-year yields, has a more detrimental effect on purchasing power than a much higher inflation rate with higher yields and a positive real return that has occurred historically. As an advisor, you do not want to be wrong with recommendations to clients and I believe that this is a good opportunity to make a “right” pick for them. Please join us for our Live & Interactive events across the country that will pick up on the inflation theme and talk much more about investment opportunities with this economic backdrop. Please contact me with any ideas or comments. As always, we will strive to earn your business and become your trusted business advisor. Enjoy the rest of the summer.

Sincerely,

Dave Wahl National Sales Manager Renaissance Investments 416-943-6959

Willpower Common will planning mistakes and how to avoid them

TAX AND ESTATE

A will is at the heart of every good estate plan. This key document records an individual’s intentions for the management and transfer of estate assets and names an executor (sometimes called an estate trustee; in Quebec, called a liquidator) to administer the estate. Although a 2012 CIBC poll revealed that the majority (55%) of respondents had created a will, here are some preventable mistakes that occurred even among those with a will. Underestimating what is involved with administering an estate Executor duties include making funeral arrangements, determining the value of estate assets, filing tax returns, collecting insurance proceeds, and accounting for financial activities (to name only a few). In the CIBC poll, two-thirds of respondents thought it would take one year or less to wrap up the estate. Not surprisingly, 78% of poll respondents had never administered an estate themselves. Estate administration typically takes 12 to 18 months; however, complications such as dying without a will, tax errors and estate litigation can delay the process by months or even years. When choosing an executor, consider whether the individual has the time and ability to dedicate to the task for a period of up to two years, or possibly longer. Choosing the wrong executor Almost 85% of Canadians have chosen a friend or family member and 55% have chosen someone who has never acted as an executor, according to the CIBC poll. An executor should have the time, skill and knowledge to undertake the numerous duties and deal with lawyers, accountants, financial institutions, insurance companies, government agencies and beneficiaries, some of whom may be in other cities, provinces, or countries. For many estates, choosing a corporate executor (either as the sole executor or a co-executor) can be an excellent option, since this can relieve family and friends of a difficult and time-consuming burden. If estate administration is already underway, an “agent for executor” can be still hired to perform financial administration duties on behalf the executor. A corporate executor

or agent for executor may even save money for the estate, since a knowledgeable professional can implement post-mortem tax strategies that could save thousands of dollars of tax.

Almost 40% of the CIBC poll respondents who had wills hadn’t updated these documents in the last five years. Preparing a will…and then forgetting about it It is recommended that wills be reviewed regularly but almost 40% of the CIBC poll respondents who had wills hadn’t updated these documents in the last five years. Changes that should trigger a review of a will include such things as marriage, divorce, the birth of a child, or relocating to another province or country. When reviewing a will, it is also a good time to consider whether the best choice has been made in naming the executor(s). Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC Private Wealth Management. 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 www.advisor.ca/togo Podcast > Americans in Canada Get Tax Reprieve Video > Your Estate Matters! www.renaissanceinvestments.ca/en/jamie_golombek/

RENAISSANCE INVESTMENTS 3

Not There Yet But when it’s time to be brave, there is cash in abundance

ECONOMIC OUTLOOK

In retrospect, it’s fair to say that the performance of the Canadian domestic economy as it rebounded from the Great Recession was nothing short of remarkable. A generous government and resilient consumers softened the blow of a U.S. and global downturn and provided a healthy lift during the early stages of the recovery. Strong export growth and a surge in capital spending followed, further spurring activity during the second leg of the economic revival. But does the economy have any more tricks up its sleeve to outperform yet again? We doubt it. While growth should do well enough to avoid a new round of monetary policy easing, tapped out consumers and cost-cutting governments could see the Bank of Canada wait for a U.S. growth-induced pick-up in 2014 before raising rates.

“...many observers thought 2012 might finally bring the real recovery needed to cut joblessness further from the recession’s 27-year high of 10 percent.” In the U.S., just a short while ago many observers thought 2012 might finally bring the real recovery needed to cut joblessness further from the recession’s 27-year high of 10 percent. That’s looking less and less probable as earlier weather-related strength unwinds and eurozone and policy-related uncertainties hamper the recovery’s earlier drivers such as corporate outlays and exports. Nor is 2013 likely to bring improvement. Even in the likely event that Congress tones down the economic-crippling level of budget-tightening built into the current fiscal plan, heightened restraint and an easing of earlier growth drivers should hold gross domestic product (GDP) to a 1.9 percent pace next year, on the heels of a lukewarm 2.1 percent increase in 2012.

The blueprint for a rebuild of Europe’s economic motors isn’t hard to outline: a kinder, gentler path of fiscal restraint in the periphery, with much more support for those countries’ refinancing needs from stability funds and central

4 RENAISSANCE INVESTMENTS

bank purchases. At this point, the politics of France, Greece, and the Netherlands show a move away from extreme austerity, but there’s a Berlin wall of resistance to less austerity for those under bailout plans, or more aggressive monetary policy. Inaction could prolong the recession into 2013, or worse, spell a chaotic breakup of the eurozone. Still, each time we approached a crisis point, Europe has come up with an 11th hour deal. Thus, best bets are that they will continue to be dragged into concessions.

As for the emerging markets, while a sub-consensus 7.8 percent GDP print is likely in China this year, the policy response is well underway, one that should accelerate growth to 8.5 percent in 2013. Having excessively tightened to prick a housing bubble and contain inflation, Beijing is reversing course, with below-target inflation giving policy makers a green light. In contrast, India’s stubborn inflation is restraining its central bank, and we’ve slashed our growth forecast for that formerly shining economy.

“The bottom line is that while the bond market may have already priced in the worst…we could still see some pressure on cyclical assets and the Canadian dollar in the near-term.”

The bottom line is that while the bond market may have already priced in the worst (with the Canadian curve unreasonably factoring in a Bank of Canada ease), we could still see some pressure on cyclical assets and the Canadian dollar in the near-term. In equities, we continue with our lean towards those focused on dividend income, domestic growth, and less cyclical commodities (potash, uranium). But if, as we expect, enough policy measures are taken to make 2013 a slightly better year for global growth, we could begin a gradual shift away from the safest of safe haven assets before year-end.

Sitting on Cash

“One thing is certain, when investors decide to test the waters, there will be plenty of cash to do so.”

Share of Cash in Total Financial Assets 30

Excess Cash*

$ bn

20 20

At this point, equities and resource prices look cheap relative to our projection for 2013 economic conditions. Forward price-to-earnings multiples are low, the forward curve for some commodities has flattened out, counting on a lasting global slowdown, and resource equities have underperformed the associated commodity prices. Nimble investors will at some point have to make a brave move back towards these “risk on” assets, including the Canadian dollar and cyclical stocks, and ditch longer government bonds that now offer very negative real yields.

One thing is certain, when investors decide to test the waters, there will be plenty of cash to do so. The amount of cash in chequing and saving accounts, brokerage accounts, money market mutual funds and GIC balances maturing in less than a year, is currently at record-high of $615 billion, and it is still rising by 7.5 percent on an annual basis – hovering around the fastest pace since 2009 (see chart “Sitting on Cash”).

What’s interesting here is that this new cash is being accumulated on top of an already elevated cash position. Immediately following the crash, investors dramatically raised their cash holdings from roughly 20 percent of the value of their financial assets to 25 percent. And despite the 40 percent advance in stock prices since then, this relative cash position remains unchanged. So now, any extra dollar that goes into cash is adding to an already anxious risk aversion position. As a result, investors are currently sitting on record-high excess cash.

0 15 -20 10

-40

-60 97

99 01 03 05 07 09 11

* Cash position relative to long-term trend. Source: Bank of Canada, Statistics Canada, CIBC

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.advisor.ca/togo Podcast > Choose China Over India www.renaissanceinvestments.ca/en/economy/

RENAISSANCE INVESTMENTS 5

Mastering HNW Seminars Attract, captivate, and motivate a wealthy audience

BACK OF THE NAPKIN

You’ve spent the last few weeks planning your first prospecting HNW seminar. You’ve sent out hundreds of invitations to the most affluent of neighbourhoods and have already received a surprising number of RSVPs back in the mail. With your event just a week away, it would appear that everything’s moving along nicely! But have you considered everything? And are you truly prepared to capitalize on this tremendous opportunity to grow your business? The success of your seminar will depend on the execution of several important moving parts. The reality is, a well-attended seminar may provide a momentary illusion of success, yet generate very little (if any) in the way of financial reward. In fact, this scenario probably unfolds more often than most advisors would like to admit. So, let’s step back and get clear on the ultimate goal of your seminar.

The ultimate goal of your seminar is to accomplish just one thing...gather new assets! Based on my experience with hundreds of HNW seminars over the last decade, I want to share with you what I believe to be the three critical phases of the “Seminar Continuum”. To maximize the potential for success, each of the phases must be executed with precision.

ATTRACT

CAPTIVATE

MOTIVATE

Get them to the seminar

Grab and hold their undivided attention

MOTIVATE Get them

THE MAGNET

THE MESSAGE

THE CALL-TOACTION

PHASE 1

PHASE 2

PHASE 3

to change what they’ve been doing

Remember, it’s NOT the goal of your seminar to: X Fill a room with people

X Make new friends

X Feed the hungry

X Educate an audience

X Entertain a group of diners

X Practice your event-planning skills

The Seminar Continuum Phase 1: Attract You can’t run a successful seminar without an audience! The Attraction phase is concerned with getting the right people to your event, and involves all of the elements that will collectively serve as your seminar “magnet”. Things like:

Once your invitation has been opened, you will need to grab the reader’s attention with a headline topic that surprises them, intrigues them, or blatantly appeals to their self-interest. Avoid using worn-out industry terminology and lifeless financial jargon when you’re developing your topic headline. For Example:

1. Your Seminar Invitation 2. Your Seminar Topic 3. Your Seminar Venue Whether you’ve purchased or compiled a list of wealthy prospects, or have simply identified an affluent neighbourhood to target, it’s now time to advertise your upcoming seminar. The research shows that high-quality, wedding-style invitations are opened by the majority of recipients. Invest your marketing dollars here to greatly increase the odds that your message will reach the eyes of your intended audience.

6 RENAISSANCE INVESTMENTS

Instead of: “Prudent Asset Allocation Principles” | boring, flat, jargon Consider: “Take the Fear out of Investing!” | emotional, hopeful, interesting Instead of: “Effective Financial Planning” | boring, flat, jargon Consider: “The Secrets of Wealth Creation” | provocative, instructive, interesting Follow your headline with 3-5 bullet points to expand upon the main topic and layer in additional elements of interest. Your objective here is to appeal to your reader’s curiosity and leave them wanting more.

In addition to your seminar “topic”, some of your prospects will place a lot of importance on your chosen venue as a reason to attend. For a dinner seminar, your venue should be recognizable, have a reputation for quality food, and should carry some degree of “cachet” in order to appeal to the affluent.

Close off the session by clearly articulating what they can expect from you after the seminar. Manage their expectations by explaining that you will be contacting each of your guests in the next 24-48 hours to answer any questions, or discuss the unique challenges they may be facing.

Keep the ultimate goal of your seminar top-of-mind during the Attraction Phase. Avoid the temptation to blindly accept all interested parties just so you can fill the seats. Instead, be sure to qualify all invitees by clearly stating the following on your invitation: “Please note: this event is ideally suited for investors with a minimum of $(insert amount) of investable assets.”

There are many other “operational” considerations around the planning and execution of a successful seminar, but a clear understanding of the three phases of the Seminar Continuum will keep you focused on the core fundamentals necessary for success.

Phase 2: Captivate Now that you’ve attracted a room full of qualified guests, your next objective is to grab and hold their attention for the duration of your seminar! To accomplish this, your spoken message will need to be interesting, relevant, thought-provoking and direct. Build rapid rapport with your audience by focusing on their emotional needs. Avoid the temptation to “sell” the services that you offer, but rather address what your audience needs to hear with respect to preserving and growing their wealth. Captivate them by displaying a deep understanding of their internal challenges during volatile times, and introduce them to how you consistently resolve these issues for your clients. Inject emotional semantics into each aspect of your discussion – using terms like “safety, protection, comfort, peace of mind, growth, and preservation”. Once you’ve made the emotional connection, the technical elements will simply provide logical support for the listener’s growing interest in you and your offering. Be cautious when inviting a guest speaker to attend your seminar. It’s absolutely essential that the focus of your audience remains on you as the expert and the go-to professional. All too often, a talented guest speaker will make a strong connection with an audience, while the advisor goes home largely forgotten.

Putting It All Together…

Sample Agenda

Seminar Materials

• Greet guests as they arrive

• Projection screen

• Show them to the private room

• Laptop computer

• Welcome your guests

• Projector

• Outline housekeeping items (washrooms, etc)

• Back-up copy of slideshow on USB key

• Explain agenda for the evening

• Remote slide advancer

• Wait staff takes orders and serves appetizers

• Power bar with long cord

• Introductory comments

• Rectangular table for laptop, projector, materials

• Initial presentation by host advisor • Introduction of guest speaker • Q&A session • Closing comments

• Flipchart, easel, markers • Handouts and/or take-home packages • Evaluation cards and pens

• Distribute evaluation cards • Guest sign-in sheet • Provide a take-home package

Phase 3: Motivate Once you’ve captured the attention of your audience, and have made a genuine emotional connection, it’s time to motivate them to change what they’ve been doing with their wealth. Remember, up until now, their financial strategy has not involved you! Take the time to summarize the key points from your main discussion. And, in the process, ask the audience some carefully worded questions to force them to formulate internal responses and to create doubt around their current approach. Position your team’s wealth management process as the missing piece in their financial picture. Install a sense of urgency, by highlighting the “pain” they may experience by not taking action…and the degree of “pleasure” (or payoff) they will enjoy by making a change.

Grant Shorten is Director of Strategic Insights at Renaissance Investments. He offers insights and approaches that will work with your clients and have an immediate impact on your practice. www.advisor.ca/togo Podcast > Three steps to the perfect seminar Video > Mastering HNW Seminars

www.renaissanceinvestments.ca/en/practicemanagement/

RENAISSANCE INVESTMENTS 7

1. Suzann Pennington Managing Director and Head of Canadian Equities CIBC Global Asset Management

2. David J. Winters Chief Executive Officer Wintergreen Advisers, LLC

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

4. Richard Elmslie Director and Senior Portfolio Manager RARE Infrastructure

5. Luc de la Durantaye First Vice-President, Asset Allocation and Currency Management CIBC Global Asset Management

WE’RE BRINGING

THE FUTURE OF INVESTING INTO PERSPECTIVE

8 RENAISSANCE INVESTMENTS

invest well The Renaissance Advisor Live & Interactive Roadshow is coming to a city near you this fall. Before they board the plane for their cross-Canada adventure, we sat down with a few of the speakers to get their thoughts on some timely topics – from long-term investing to must-have gadgets. 2

“Long-Term Investing is Dead.” That was a headline in a Canadian investment publication recently. What’s your reaction?

Suzann Pennington – This type of sensationalistic headline is an easy sell in tough times – I’ve seen it a number of times in my career. Richard Elmslie – Long-term investing is by no means dead. The long term is relatively simple to predict, it's the path to get there that is very uncertain. David J. Winters – I completely disagree with the headline. When we look at the firms and people who have really prospered, they were owners or part-owners of businesses for long periods of time. For example, in Canada the Thomson family started with a single newspaper and over the past 50 years has grown into a global media giant. They didn’t achieve this by rapidly trading securities or other forms of short-term market speculation, but taking a thoughtful, long-term approach to growing the business.

Luc de la Durantaye – The world economy has always experienced a changing environment whether we think of the depression of the 1930s, the war periods or more recently the 1990s economic boom followed by the technology bubble, the commodity boom in early 2000s and the real estate bust of 2008. In other words, the investment environment has never been a long-term stable investing continuum. Suzann Pennington – I believe it is true that many people have, unfortunately, become very short term in their views and research. But I’ve met a lot of great advisors over the years who have diligently supported clients through the tough times. It is much easier to get the long-term plan right than it is to market time. Patrick O’Toole – I can understand the writer’s frustration in dealing with a prolonged deleveraging cycle. Given the volatility of the past years and the political actions that have altered how financial markets work, it’s tempting to agree. However, I still believe that the old axiom of maintaining a well-diversified portfolio holds true. Those who remained disciplined and who held a reasonable amount of fixed income securities have likely experienced much less volatility in recent years, and have grown their portfolios.

Suzann Pennington – The consequence of those who are insisting on shortening time horizons is that we are finding more market inefficiencies – more mispriced stocks. Our long-term life cycle models allow us to manage through the daily/quarterly noise that is so prevalent in market headlines. Often short-term investors fail to have the context to properly evaluate the importance of a piece of information to the true value of the underlying company. I believe that the combination of short-term traders and the proliferation of index-based ETFs has actually increased the opportunities for long-term fundamental investors like us to outperform.

RENAISSANCE INVESTMENTS 9

Markets have relentlessly rotated from risk-on to risk-off. How should those with a longer-time horizon (Gen X, Gen Y) approach wealth generation in these conditions?

If you had to name a key theme for advisors and their clients in 2013, what would it be and why?

Patrick O’Toole – I don’t think investors, be they Gen X, Y or whatever, should alter their strategies if they are investing with a longer-term horizon. Stick to a discipline that looks through short-term volatility, maintain proper diversification across sectors and countries, and avoid trying to time markets.

Suzann Pennington – I don’t know when it will happen but we have to be ready for the inevitable end to the great bull market in bonds and the implications that has for long-term portfolio positioning and sources of sustainable income. We spend a lot of time stress testing company balance sheets, cash flows and dividends and are very optimistic about the ability of many companies in our universe to sustain and grow their dividends, even in a challenging macro environment of weak growth and ongoing credit shocks.

Richard Elmslie – Yes, focus on the long term and forget about the short-term noise. The long term should be about big picture themes and these should, by their nature, hold true through the short-term volatility. The volatility should be used opportunistically to top up or trim to rebalance investments. Suzann Pennington – I don’t think that you can outsmart the market with big home runs – just keep it simple and swing for singles. I’m not a big believer in market timing and I saw a lot of people get whipsawed in 20082009. Keep it simple: dollar-cost averaging is a great way to buy more units when security prices are low and less units when security prices are high. David J. Winters – We like Ben Graham’s famous quote “Be greedy when others are fearful and fearful when others are greedy”. It takes a great deal of discipline to execute this approach in the real world, but it can be very rewarding.

“When financial markets experience short-term turbulence, we found that focusing on the value factor provides an important guidepost.” Luc de la Durantaye Luc de la Durantaye – One of our main long-term investment anchors has always been relative valuation – emphasizing equity, fixed income or currencies that are undervalued, and avoiding expensive asset classes. This valuation approach has provided empirical evidence of successful investment signals for investors. When financial markets experience short-term turbulence, we found that focusing on the value factor provides an important guidepost. Suzann Pennington – My apologies for continuing with the motherhood statements but the truth is, they work: One – If you don’t have a long time horizon you shouldn’t be investing in equities – there always has been, and always will be, volatility. Two – Work with your advisor to set an appropriate long-term diversified portfolio to meet your objectives and your risk parameters. THEN STICK TO IT. And three – Understand what role the investments in your portfolio are supposed to play in your diversified strategy. Not all holdings should be performing the same way at the same time. Proper diversification results in better risk-adjusted returns and ultimately more restful sleep.

10 RENAISSANCE INVESTMENTS

“...we have to be ready for the inevitable end to the great bull market in bonds and the implications that has for long-term portfolio positioning and sources of sustainable income.” Suzann Pennington

Luc de la Durantaye – Fiscal retrenchment will likely be with us in 2013 as the U.S. will be forced to tackle its large fiscal deficit at the same time as Europe and Japan will continue their efforts to control their respective budget deficits. A focus on income during this period of expected sluggish growth should help portfolio performance. Richard Elmslie – Four years into the crisis there is still no clear view regarding the resumption of economic growth. In this unpredictable environment, we believe that advisors and clients should be focused on capital preservation and investing in companies with secure, predictable cash-flows and growing dividends. David J. Winters – Look to the world outside of North America. There are many portions of the world that are growing and even thriving, and by expanding your investing horizons, you have a great opportunity to prosper over the long-term as the middle classes around the world continue to develop. Selectively finding quality companies that have multi-currency streams of earnings is a key part of our process. Patrick O’Toole – The most likely theme for 2013 is that we’ll have more disruptions from the credit crisis fallout. Debt levels continue to remain too high in most of the developed world, and Europe has much work to do if it’s going to better align fiscal policies, labour cost structures, and productivity. Locally, we will likely see Canada begin to lose some of its lustre relative to other countries. We’ll still look good, but excessive household debt levels will limit consumers’ ability to bolster overall growth.

Outside of your regular quantitative/qualitative analysis, where do you get your investment ideas from?

Finally, when you are on the road presenting, what’s the one item you can’t be without?

Richard Elmslie – By talking to industry experts, including management of companies in our universe about issues (both positive and negative) affecting their companies, helps me to identify the longer-term trends and to find ways to invest in them.

Patrick O’Toole – I must have my iPad. It’s easy to get through security at the airport, and allows me to maintain contact with colleagues and the market, surf the web, read my newspapers and check email.

David J. Winters – It’s reading and analyzing the public corporate filings and combining that with a lot of hard work and shoe leather. Travel has been an invaluable resource for us. I recently spent four weeks in Asia, and being able to witness the rise of the middle class is extremely helpful while we analyze investment ideas. Suzann Pennington – We have had great results from our analysts and portfolio managers picking up a nugget of information and pursuing its implications to develop a view that may be quite different from the street. Our analysts are “career analysts” – they are typically industry specialists with very deep knowledge combined with curiosity. This desire to always explore a little deeper, think outside the box, and then share that knowledge to stimulate discussion and deeper understanding with the entire team has been a terrific source of ideas. Patrick O’Toole – I think we’ve been successful in the fallout from the credit crisis because we believed we were in a different environment than seen in past recessions. The old relationships of the economy’s response to central bank actions in the post-war recession/recovery cycles had to be ignored. We sought different indicators from the banking and housing sectors, and studied history for other periods where deleveraging had dominated the economic backdrop for a prolonged period of time.

Richard Elmslie – Agreed. iPad. Through sheer weight of numbers sold, the key software providers are prioritizing iOS apps ahead of everything else. Suzann Pennington – My BlackBerry. I still find it to be the quickest, simplest, most reliable way to stay in touch with the market, new information, companies and the office. I am disappointed at RIM’s failure to deliver on a competitive PlayBook though so am still lugging around my computer. David J. Winters – I keep my BlackBerry and Bloomberg close at hand at all times to keep in touch with my office and to stay informed about the latest news. Luc de la Durantaye – A good piece of research! We have a lot of reading given the various sources of research we have access to. I always bring a piece of research that I can catch-up on in the plane or taxi. Of course I also need to stay connected to the office via the BlackBerry!

“I must have my iPad. It’s easy to get through security at the airport, and allows me to maintain contact with colleagues and the market, surf the web, read my newspapers and check email.” Patrick O’Toole

Hear directly from these portfolio managers, and more experts, at The Renaissance Advisor Live & Interactive Roadshow this fall.

ADVISOR ToGo Access to the experts when you need them

Listen to short podcasts from these experts and others. www.advisor.ca/togo

David J. Winters – Wintergreen Advisers

Podcast > Boring Companies Make Good Investments

Patrick O’Toole – CIBC Global Asset Management

Podcast > Long-Term Interest Rates Will Remain Stable

Nick Langley – RARE Infrastructure

Podcast > Know Your Infrastructure

www.renaissanceroadshow.ca

View short videos from the experts at: www.renaissanceinvestments.ca/en/manager-videos Suzann Pennington – CIBC Global Asset Management Video > Understanding Downside Risk Will Continue to Pay Off David J. Winters – Wintergreen Advisers Video > Buy and Hold Investing is Alive and Well

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In today’s low rate environment, income doesn’t have to come at the expense of capital gains. Use a multi-asset class income strategy with the flexibility to search for sustainable yield and total returns: High Current Income:

High Historical Outperformance:

• High 6.50% distribution yield with a minimum of 4.86% since the fund’s inception in 1997 • Predictable $0.06 monthly distribution

• One and two year returns in top 5% of all funds in category (Source: PALTrak) • First and second quartile rankings across all time periods

Growth of $10,000

Yield (%)

$17,000

6 5 4

Renaissance Millennium High Income Fund S&P/TSX Composite TR Canadian Dividend & Income Equity Category

3.5% greater than equities

4.2% greater than government bonds

$15,000 25% MORE

3 $13,000

2 1 0

$11,000

Equities1

Renaissance MHI2

Fixed Income3

S&P/TSX Composite Index. 2 Renaissance Millennium High Income Fund; distribution yield may include a combination of capital gains, interest, dividend, and return of capital. 3 DEX Universe Bond Index.

Key Features: • Taps into multiple sources of yield, including investment grade bonds, high yield bonds, REITs and global dividendpaying equities • Lower volatility and higher risk-adjusted returns vs. peer group • Pays fixed $0.06/mth • Managed by Barry Morrison since fund’s inception in 1997 more information on how to put this solution Z toForwork for your clients, please speak to your Renaissance Investments representative.

12 RENAISSANCE INVESTMENTS

$9,000 2009

2010

2011

2012

Source: Morningstar Direct

First & Second Quartile Rankings Across All Time Periods Fund Performance vs. Category and S&P/TSX Composite Index (As at June 30, 2012)

Quartile Ranking Fund (%) S&P/TSX Composite Index (%) Category Average (Canadian Dividend and Income Equity) (%) Value Added vs. S&P/TSX Composite Index (%)

6 mth 1 4.20 (1.53)

YTD 1 4.20 (1.53)

1 yr 1 6.32 (10.25)

3 yr 1 14.95 6.69

5 yr 2 2.00 (0.74)

10 yr 2 7.48 7.56

1.11

(3.11)

8.86

1.16

7.42

+5.73

+16.57

+8.26

+2.74

-0.08

(Current yield is annualized historical yield based on the 7-day period ending June 30, 2012 and does not represent an actual one-year return) Source: Morningstar Direct

Flying With Integrity THANKS TO OUR SUPPORTERS

Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians invest well and live better. Here is one of the outstanding professionals we are so very proud to work with. What I love about the business: Being able to provide top-quality professional advice with a very personal focus. Being able to do the right thing and always follow through with promises. Geographically my location is in the perfect spot, just 1 hour north of Edmonton on the road to Fort McMurray. Our clients are mostly blue collar business owners with a strong focus on agriculture and oilfield service. Lastly, I thank my lucky stars that I started this business at age 24, because now 28 years latter, I can not imagine a more rewarding life...giving to family, community church and people. How I prepare and lead client meetings to ensure they are productive: The very first thing I do before we get started is to ask the clients ‘Is there anything specific you want to discuss?’. I have a meeting agenda, but their questions and discussion areas always supersede my agenda. What I do to leave a good first impression with prospective clients: Listen. Listen. Listen. To get to know someone and really understand their situation and goals I ask lots of questions so I can truly understand their world. Best tip for gaining new clients: I ask people about their cash flow management strategies: I soft sell them some quality ideas that work. We start slowly to build a relationship. I never ever sell anything on the first meeting.

What I offer to the local marketplace and to our clients: Integrity. It’s a tight-knit community and I provide assistance to those who need it. Favourite hobbies: Heli-skiing – but I am not an adrenalin junky! I also enjoy flying my bush plane and I help out seasonally on the family farm. One item I can’t be in a client meeting without: My two-screen computer and a pad of paper. I take plenty of notes in my meetings.

Earl Siegle Firm: Siegle Financial Group Ltd, Manulife Securities Investment Services Inc. Years in Business: 28 Team Members: 1, plus 2 full-time assistants

RENAISSANCE INVESTMENTS 13

live better

SUIT YOURSELF This fall, timeless trumps trendy in the game of Dress for Success

148 RENAISSANCE INVESTMENTS

Build a fall work wardrobe with style and staying power. Round out your basic building blocks – the perfect suit, the essential shoe, the classic coat – with accents in the season’s top colours (tangerine, anyone?) and autumnal fabrics like cashmere and jersey.

If your clothes could talk, what would they say about you?

You really can dress for success

These are interesting times for business professionals, sartorially speaking. Billionaire nerds wear hoodies to meet with their lawyers, skirt lengths rise and fall like the TSX, and nobody really knows what casual Friday even means anymore.

In a recent survey of employers, 41 percent of those polled asserted that employees who dress professionally are more likely to be promoted. The number was even higher in the financial services industry at 55 percent.1

But serious professionals – especially those in client-facing positions – know that clothes still matter. Hitting the right note with your appearance should be an important component of every meeting plan. The correct clothes can instill trust, show respect, and foster the impression that you are an attentive, detail-oriented professional. The wrong clothes will draw attention away from you and detract from your message. Visual impressions are quickly formed and difficult to dispel: clients will remember your scuffed shoes long after they have forgotten your excellent investment advice.

We’re hard-wired to notice clothes: the results of a study published in Journal of Experimental Social Psychology introduced the term “enclothed cognition” to describe the surprising influence clothes have on the psychology of both the wearer and the people they meet. The physical experience of wearing the right clothes and the symbolic meaning of clothes – white coat equals doctor, suit equals professional – had equal weight. Wearing clothes associated with “attentiveness and carefulness” actually makes workers more attentive and careful.2 There’s a reason superheroes change outfits before they take on the world. Your clothes send a powerful message to the people you work with, and to yourself. What will your message be?

The basic building blocks Dressing strictly according to trend is akin to a steady diet of junk food: both expensive and unsustainable. The well-balanced wardrobe requires investment in wholesome basics that will last through many seasons without leaving you hungry for replacements. Here’s a cheat-sheet of wardrobe basics. His

Hers

Theirs

Don’t

The Perfect Suit

Natural shoulders, notched lapel, trousers: flat-front if you’re skinny, pleats if you’re not

Fitted jacket that hits at the hips, straight skirt just above the knee

Dark navy, lightweight wool

Invest in alterations

Wear a shirt in a darker colour than your suit

The Shirt

White, one button barrel or French cuffs, straight point or medium spread collar

Women have endless options, as long as it has a back and the neckline doesn’t plunge

Proper fit

Splurge on quality fabrics and thick buttons

Strain buttons

The Classic Fall Coat

Dark topcoat in cashmere or light wool, black or navy

Topcoat in cashmere or light wool. Dark is conservative, but you can opt for tweed or a sophisticated pattern

Knee length, in a trim silhouette

Take care of regular cleaning and proper storage

Wear a big fur collar unless you are Cruella de Vil or Daddy Warbucks

The Essential Shoe

Leather oxford

Leather or patent pump, maximum three-inch heel

Black

Store shoes on cedar shoe trees

Never show your toes at work

RENAISSANCE INVESTMENTS 149

trends

Vital signs of life in the arid professional wardrobe

Showing up at work every day in a navy suit and white shirt is perfectly acceptable, completely professional, and totally, utterly boring. Far from frivolous, subtle nods to trends are signs of personality, approachability and up-to-date awareness of the world around you – all valuable traits in a professional advisor. This fall, professional women can be economically trend-savvy with a new print, a little patent leather and one new dress or jacket. Try a paisley-print blouse, a patent leather belt in oxblood red, a jacket with embroidered embellishments or military accents (olive greens, gold buttons, structured silhouettes), a tidy sheath dress (think Kate Middleton), or a colour-block or mixed pattern scarf.3 Men can experiment by coordinating a paisley-patterned tie with a check or striped shirt, trying a suit in the new dark (an inky shade darker than navy but not quite black), or adding professorial accents like a tweed jacket or simply a scarf in the new preppy neutrals (brick, rust, red). Round out your tie and pocket square collection with a new addition that draws on one of the hot colours for fall. So, with just a little effort, you can be both professional and stylish without breaking the bank. Invest in the right basics, spend a little money on professional maintenance, and add small (but crucial) hits of style with one or two on-trend items and accessories.

Skirt length The Skirt Length Theory is the quaint notion that women’s hemlines predict stock prices. Short skirts reflect consumer confidence and bullish markets. Bear markets bring gloom … and longer skirts. Not to be taken seriously, except as an indicator of fashion and stock market unpredictability. Searching for the perfect skirt length? Two centimetres above the knee is the optimal length for comfort and class.4

Pantone

Tangerine Tango

Fall colours Maple trees aren’t the only ones turning orange this fall – colour trend-setter Pantone has declared “Tangerine Tango” to be the hue of 2012. The Pantone Fashion Colour Report for Fall 2012 for women includes French Roast, Bright Chartreuse, and Olympian Blue. Pantone says men should add a hint of Rhubarb and Sea Fog to their fall wardrobe.5

French Roast Pantone 19-1012

Honey Gold Pantone 15-1142

Pink Flambé Pantone 18-2133

Tangerine Tango Pantone 17-1463

Ultramarine Green Pantone 18-5338

Bright Chartreuse Pantone 14-0445

Olympian Blue Pantone 19-4056

Titanium Pantone 17-4014

Rhapsody Pantone 16-3817

Rose Smoke Pantone 14-1506

Source: www.pantone.com

1 www.ehow.com/info_8136169_importance-professional-dress-workplace.html#ixzz1z21Dl8Du 2 www.sciencedirect.com/science/article/pii/S0022103112000200 3 http://nymag.com/daily/fashion/2012/03/14-biggest-fall-2012trends.html#photo=68x00069 4 www.investopedia.com 5 www.pantone.com/pages/fcr.aspx?pg=20949&ca=4 Other: The Esquire magazine handbook of style: www.esquire.com/the-side/style-guides/mens-fashion-week/new-trends-fall-winter-2012

150 RENAISSANCE INVESTMENTS

brain calisthenics Word scramble – Unscramble the following letters to spell words from the Invest Well 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. izonroh

2. pedlscinii

6 9

3. utialvnao

4. rspaaeetmr 5. eiddsidnv

4 6

7 9

6. cfilas

7. suocerre 8. ysatlans

8 3

9. bgkainn

10. erlbarbkyc

9 1

Source: 4puz.com

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

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

RENAISSANCE INVESTMENTS 151

To learn more about how Renaissance Investments can help you and your clients invest well and live better, visit www.renaissanceinvestments.ca or call 1-888-888-FUND (3863).

FOR DEALER USE ONLY Renaissance Investments and the Axiom Portfolios are offered by CIBC Asset Management Inc. 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 investment, legal or tax advice. The material and/or its contents may not be reproduced or distributed without the express written consent of CIBC Asset Management Inc. ™ Axiom, Axiom Portfolios, Renaissance Investments and “invest well. live better.” are registered trademarks of CIBC Asset Management Inc.

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Renaissance Investments is offered by CIBC Asset Management Inc. TM Renaissance Investments and “invest well. live better.” better.” are registered trademarks of CIBC Asset Management Management Inc. 02001E(201207)

Practice Practice Management Manag ement Grant Grant Shor Shorten rtten Director, Strategic Insights, Renaissance Investments