The Renaissance Advisor by renaissancemag

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

The Growing Appetite for Investment Diversity

Q2 â&#x20AC;&#x201C; JUN. 30, 2016

Infrastructure Assets __________

Multi-Asset Strategies __________

Flexible Yield Strategies

For Advisor Use Only

Page

In this issue

Economic Outlook 4 The Looming Bequest Boom Tax and Estate 6 Death and Taxes Global Market Perspectives Brexit and Beyond

The Growing Appetite for Investment Diversity 8 Solution Highlight 12 Access Multiple Real Assets Sectors in One Investment

Lifelong Learning

Thanks to Our Supporters 17 Service! Service! Service! Brain Calisthenics 18

8 14

From the Managing Director of the Renaissance Sales Team

A Hunger for New Investment Opportunities Welcome to the summer edition of The Renaissance Advisor. With the impending intergenerational transfer of wealth, you have a tremendous opportunity to assist your clients and their loved ones in reaching their financial goals. Coupled with a low-interest rate environment and increasingly volatile markets, they will seek your direction more than ever before. An indication that investorsâ&#x20AC;&#x2122; needs and expectations are changing comes from a recent CIBC survey1. Despite the lower loonie, 41% of respondents say they will invest mainly outside of Canada. Additionally, alternative asset classes are becoming a more attractive option to improve diversification and portfolio performance. Your advice and expertise with this new direction will poise your clients and your business for success. In our feature article, The Growing Appetite for Investment Diversity, we share insights from the experts on global trends and opportunities. We also take an in-depth dive into why investing globally and in alternative assets should be part of a diversified portfolio. When advising affluent clients and recommending financial solutions, consider the Renaissance Real Assets Private Pool. Its key objective is to seek long-term capital growth and income by investing primarily in securities of companies throughout the world that engage in real assets sectors such as infrastructure, real estate, and natural resources. Contact your Renaissance sales representative today for more information. As always, we also hear from our experts. Jamie Golombek discusses how your clients can leave less to the taxman and more to their loved ones, and Ben Tal offers insight on the looming bequest boom and what we can expect. We thank you for your business and welcome your feedback.

Shelly McLean Managing Director, National Sales Renaissance Investments

CIBC Poll, Angus Reid Forum, Jan 20-22/16

The Looming Bequest Boom – What Should We Expect? economic outlook

Over the next decade, an estimated $750 billion will be transferred to Canadians between the age of 50 and 75. That will be the largest intergenerational wealth transfer in Canadian history over such a period of time. And the amount will be even larger during the subsequent decade. This significant wealth transfer could impact important economic variables such as wealth distribution, savings, labour market participation, start-up activity, and real estate markets.

The Givers There are currently just over 2.5 million Canadians over the age of 75, of which close to 45% are widowed. That number (75 years and older) represents a 25% jump over the level seen a decade ago. And the next decade will see an even greater jump. Yes, Canadians are living longer with mortality rates among the elderly falling steadily, but the demographic picture still suggests that, in absolute terms, more Canadians over the age of 75 will pass away in the coming decade. And the new cohort of that age group is not only the largest on record, but also the wealthiest. Average net worth among Canadians at this age has risen 30% between 2005 and 2012. We estimate that total net worth of this cohort is currently north of $900 billion. The Beneficiaries On the receiving end of that inheritance pool are mostly Canadians aged 5075. Their number has risen dramatically over the past decade as more baby boomers passed the age of 50. That cohort will continue to grow in the coming decade, but more slowly. While debt accumulation among those baby boomers has accelerated in recent years, their overall financial position has, in fact, improved with the ratio of assets to debt recovering strongly in recent years.

250

$000s

what they expect to receive1. And then we derived our estimates by adjusting to (predictable) demographic changes. The rationale here is that talking about 200 the past is easier, and the answers should be more accurate. 150

So what have we learned? Just over half of Canadians aged 50-75 have

100 received an inheritance. And half of those received it in the past decade.

Zooming in on that sub-group, the average inheritance was $180,000 with the 50 largest amount being in British Columbia, no doubt due to the elevated value of 0real estate in the province, followed by Québec and Ontario. For the rest HSthe or Less College/Tech. University+ of the country, average inheritance received over the past decade was below $100,000. Based on that information, and Statistic Canada’s demographic projections, alongside conservative assumptions regarding wealth appreciation2, we estimate that the coming decade will see close to $750 billion exchanging hands. Total Inheritance 800 700 600 500 400 300 200 100 0

($bn)

2006 - 2015 Estimated

2016 - 2025 Projected

Source: Statistics Canada, CIBC, CIBC Inheritance Survey, 2016 (age group 50-75, past 10 yrs, inflation adjusted)

That is almost 50% more than the estimated amount of inheritance received over the past decade. The transfer is estimated to boost the asset position of Canadians 50-75 years old by no less than 20%.

So, How Much?

Inheritance and Inequality

Guesstimating the amount of that wave of potential inheritance is tricky. Most estimates are based on forward-looking questions, asking potential beneficiaries what they expect to receive. It’s clear that that approach is problematic for many obvious reasons. We have decided to tackle the issue differently, and asked Canadians about the inheritance they actually received as opposed to

The abnormal distribution of average inheritance by province is the first hint that the average figure hides a lot of interesting information. Focusing on the distribution by income clearly shows that more money is going to Canadians that are already in higher income brackets, with average inheritance for those who earn more than $100,000 almost three times higher than among lower-

income Canadians. The same goes for the breakdown by education; those with higher education received notably more in inheritance. Average Inheritance by Education 250

$000s

200 150 100 50 0

HS or Less

College/Tech.

University+

Source: CIBC Inheritance Survey, 2016 (age group 50-75, past 10 yrs)

Another potential impact of large-scale inheritance is to stimulate labour supply by encouraging self-employment as it reduces the liquidity constraints on starting a business. Our assessment is that the net outcome of the upcoming inheritance wave will be an increase in self-employment activity among Canadians over the age of 50. Furthermore, one-fifth of beneficiaries indicated that the money was used to reduce debt. Given the expected notable increase in the inheritance pool in the coming decade, that can impact the pace of debt accumulation, and more so, the distribution of debt. The impact on real estate markets will be gradual, and in large cities such as Toronto and Vancouver, it might modestly ease the shortage of supply of low-rise units. Furthermore, given elevated real estate valuations, it’s reasonable to expect that a larger portion of the projected inheritance will be transferred via inter-vivos gifts–a factor that might have a positive impact on homeownership rates among younger Canadians, and would probably increase overall spending on home renovations.

This largely abnormal distribution is reflected clearly in the chart above, with the average inheritance more than four times larger than the median. The large proportion of the looming bequest boom that is expected to go to high-income Canadians suggests that income inequality will be further transformed into wealth inequality. Roughly 40% of high-income individuals ($bn) 800 indicated that they saved or invested their inheritance, while a larger proportion 700 of lower income Canadians used that money towards daily expenses. Simply 600 put, 500 if wealth is not evenly spread across society, then inheritance will repeat the 400 pattern and exacerbate inequality. 300

Given that many households will receive inheritances when they are approaching 200 retirement age, the upcoming transfer can potentially impact the Canadian 100 retirement landscape. As demonstrated earlier, higher-income households, 0 2016 are - 2025 Projected who are less2006 likely- 2015 to beEstimated unprepared for retirement, more likely to receive inheritances and to receive larger amounts than their lower-income counterparts. Therefore, inheritance will have little impact on their decision to retire and will potentially improve their already sufficient level of retirement readiness. At the same time, the anticipated inheritance receipts of low- and middle-income households represent a much larger percentage of their current wealth, suggesting that inheritances could potentially be more influential in boosting their retirement security.

From April 26 to April 27, 2016, an online survey was conducted among 1,003 Angus Reid Forum panelists who are Canadians between 50-75 years old and have received an inheritance. The margin of error–which measures sampling variability–is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to gender and region. Discrepancies in or between totals are due to rounding.² ² We assumed annual return on assets (real estate and financials) of 3%. 1

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/

Death and Taxes: Leaving Less to the CRA and More to Loved Ones

Tax AND Estate

Registered Plans

Death can trigger a significant tax bill that may leave an unexpected liability when a loved one passes away. Here is what happens to nonregistered and registered assets upon death. Non-registered Assets The general rule is that taxpayers are deemed to dispose of all their property, such as stocks, bonds, mutual funds and real estate, immediately before death at fair market value. When the fair market value exceeds the property’s adjusted cost base, the capital gain is 50% taxable in the deceased’s final tax return, although the capital gain on a principal residence is usually exempt. This deemed disposition upon death may be avoided, or deferred, by transferring the property to the deceased’s spouse or common-law partner, where applicable. The capital gains and the associated tax liability can be deferred until the death of the second spouse or common-law partner (or until that spouse or common-law partner sells the property, if earlier). Taxes on the deemed disposition of qualified small business corporation (QSBC) shares and qualified farming or fishing property may be reduced or eliminated by claiming any remaining lifetime capital gains exemption (LCGE). In 2016, the maximum allowable LCGE is $824,176 for QSBC shares or $1 million for qualified farming or fishing property. Tax from the deemed disposition associated with appreciated marketable securities may be eliminated by leaving appreciated publicly-listed shares, mutual funds or segregated funds to registered charities through a will. In addition, the charitable donation tax credit may yield tax savings of up to 54% of the fair market value of the donated shares, depending on the taxpayer’s province of residence.

The fair market value of an RRSP or RRIF as of the date of death is included on the deceased’s final tax return, with tax payable at the deceased taxpayer’s marginal tax rate for the year of death. This income inclusion can be deferred if the RRSP or RRIF is left to a surviving spouse or common-law partner, in which case tax will be payable at the survivor’s marginal tax rate in the year in which funds are withdrawn from the survivor’s RRSP or RRIF. Alternatively, an RRSP or RRIF may be left to a financially dependent child or grandchild and used to purchase a registered annuity that must end by age 18. The tax on the RRSP or RRIF proceeds will, therefore, be spread over several years, allowing the child or grandchild to take advantage of personal tax credits as well as graduated marginal tax rates each year until reaching age 18. If a child or grandchild was financially dependent on the deceased because of physical or mental disability, then the RRSP or RRIF proceeds can be rolled to the child’s own RRSP or RRIF.

Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC Wealth Advisory Services. 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/

Brexit and Beyond Global Market Perspectives

After a volatile first quarter, markets calmed down and moved into a wait-and-see mode. The vote on Brexit, the U.S. presidential election and the U.S. monetary policy decisions were top-of-mind for investors. That was until June 23, the day of the U.K. referendum–the day the U.K. voted to leave the European Union. This outcome was a shock, and markets reacted accordingly with a correction in risky markets (equities, commodities and high-yield bonds were lower), a rally in safe assets (government bonds, gold, the U.S. dollar and the yen were up strongly) and a general increase in volatility. What’s most important for investors is not the immediate or short-term market reactions to this unforeseen turn of events, but its longer-term implications.

“The vote on Brexit, the U.S. presidential election and the U.S. monetary policy decisions were top-of-mind for investors.” At this point, the political implications of the U.K. leaving the European Union are difficult to assess, as the process will be subject to long and complicated negotiations. One thing we know for certain however, and this is one of the most important implications for financial markets–there are more uncertainties and risks today than if the Remain vote had won. Increased uncertainty and market volatility are the last things the global economy needs, as it remains fragile with a cyclical outlook that is not improving. Faced with profit margins under pressure and lackluster sales growth, and now political instability in Europe, corporate leaders are likely to think twice before hiring or investing. Earnings growth will likely remain subpar.

The dilemma for investors remains the same: with bond yields even lower than they were three months ago, and unattractive equity markets, where do you invest your money? From a relative point of view, the outlook for equities may be bleak over a short or intermediate horizon, but over the long term, valuation still favours equities over bonds. However, the road to the long term could get bumpy and, as a result, we are adopting a more neutral stance between equity and fixed income for the time being to reflect the various uncertainties. In addition, in a world of ultra-accommodative monetary policies and competitive currency depreciation, gold might be the ultimate winner. Low rates and a lack of alternatives can also make real estate an attractive option. The bottom line is we live in a new investment era and we need to look beyond traditional equities and bonds to find attractive opportunities. The search for yield continues.

“... the outlook for equities may be bleak over a short or intermediate horizon, but over the long term, valuation still favours equities over bonds.”

Luc de la Durantaye is Head of Asset Allocation and Currency Management with CIBC Asset Management. He is responsible for strategic and tactical asset allocation, currency management, absolute return strategies and index management.

Perspectives For the period beginning July 1, 2016

Asset Allocation Outlook as at July 1, 2016 Underweight

Neutral

Overweight

Asset Class

BREXIT AND BEYOND

“...there are more uncertainties and risks today than if the Remain vote had won.”

The political and economic implications of the U.K. exit from the European Union are difficult to assess at this early stage. What we do know—there are more uncertainties and risks today than if the Remain vote had won.

Significant Moderate

Moderate Significant

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

P P

Canadian Corporate Bond International Government Bond

Equity

Increased uncertainty and market volatility are the last things the fragile global economy needs when the cyclical outlook is not improving. Slower global growth seems inevitable for many reasons including: the need to slow credit growth in China, increasing pressure on the profitability of European banks and a profit recession in the U.S.

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

P P P

Emerging Markets

Underweight

Go to renaissanceinvestments.ca to read the full Perspectives report

Neutral

Overweight

Currency (versus U.S. Dollar) Significant Moderate

Canadian Dollar Euro Japanese Yen British Pound

Swiss Franc Australian Dollar Emerging Markets

Moderate Significant

P P P

P P P Perspectives | 1

renaissanceinvestments.ca/en/theeconomy/

appetite the Growing

for investment diversity

Infrastructure Assets __________

Multi-Asset Strategies __________

Flexible Yield Strategies

The investing world is changing. Investors look outside Canada and to non-traditional assets Canadians investing for retirement are increasingly looking for alternatives to meet their financial goals. A 2016 CIBC investor survey found that despite the lower loonie, as many as 41% of investors say they are looking for opportunities outside of Canada, up from only 31% last year.1 The change in course away from traditional investments is more easily understood when you take into account that, over the last year, 56% of Canadian investors did not achieve the returns they expected because of declines in equity markets.1 But we’re not done yet. In addition to the search for broader horizons and declining equity markets, “The United Kingdom vote, Brexit, was an important and unpredicted turn of events,” says Luc de la Durantaye, Managing Director, Asset Allocation and Currency Management, CIBC Asset Management. “The uncertainty that Brexit has triggered means slower economic activity, therefore slower earnings growth. In addition, the lower effectiveness of monetary policies (due to further easing by the Bank of England and the European Central Bank, with interest rates already in negative territory) means that equity markets are going to have lower expected returns.” So, what’s the bottom line? “We are stuck in a low-growth world and Canada’s not an exception,” says Vincent Lepine, Vice President, Global Asset Allocation and Currency Management, CIBC Asset Management. “Investors who stay invested only in Canadian cash, bonds and equities are not likely to meet their return objectives in the long run.”2

“The uncertainty that Brexit has triggered means slower economic activity, therefore slower earnings growth.” Go Beyond Borders According to an article in The Globe and Mail, “The Canadian stock market earns a “D” grade on diversification.” This failing grade is due to the financials and energy sectors accounting for almost 60% of the S&P/TSX Composite Index and important sectors such as health care, tech and consumer staples under 5%.3 Adding global exposure can smooth out the sectoral diversification problems in the Canadian market.3 The point of diversification becomes clear when you look at market performance over the past 15 years–a period in which four different equity markets around the world posted the best annual returns.

But Canada’s benchmark S&P/TSX Composite Index didn’t top the list once during that time. Last year, Japan’s Nikkei was the top performer, rising 9.2%, while the U.S. S&P 500 Index ranked first in 2014, returning 13.7%.4 The diversification effect that comes from investing in countries with low cross-correlations can increase returns and reduce volatility over the long term. In other words, global diversification helps to improve the risk-adjusted performance of portfolios.5 Breaking Away: Non-traditional Investments In addition to taking a world view on investing, the CIBC survey also showed that market volatility and the lower loonie are prompting nearly a quarter (22%) of investors to look at non-traditional assets as a way to diversify and gain exposure to growth.1 Indeed, the investment landscape has expanded; a wider set of opportunities exists beyond core equity and fixed income to include non-traditional asset classes, such as real estate, infrastructure and high-yield debt.6 Breaking away from the well-trodden path of traditional investments can bring some interesting benefits, considering how markets are no longer behaving in the traditional manner, either. The Markets are Misbehavin’ We’re almost getting used to volatility making the headlines; it seems that volatility is here to stay, at least for the remainder of the year. In fact, advisors and chief investment officers predict that volatility will remain a key theme in 2016.7 In addition to bracing for heightened market volatility, investors must now also build portfolios that compensate for changing market behaviour.

Infrastructure assets offer your clients the compelling benefits of:

Consider this: In the past, when one part of the market went down, generally another would go up. Recently, however, many parts of the market have started to move together. Data over the past two years indicate that large-cap stocks correlated 84% with global small-cap stocks and 76% with international stocks. Such high correlation rates indicate that these stocks are moving in the same direction in the market.7

This high correlation has left many investors with riskier portfolios than they realize, as the risk-reducing power of traditional diversification has been diluted. The solution may lie in adding assets with zero correlation to other parts of a portfolio, i.e. non-traditional assets. Non-traditional Asset Investment Solutions An appropriate allocation into non-traditional asset classes can help your clients be practical and progressive in today’s financial environment. Consider adding these non-traditional assets and approaches to your client portfolios.

Infrastructure Assets Infrastructure provides countries and economies with the services they need to function, grow and prosper. This includes essential services such as electricity, water, gas and oil, and transportation services such as roads, airports, rail and port. Despite increased demand and usage, countries around the world have underinvested in infrastructure for decades. Now faced with the task of building and renewing essential services, governments are turning to the private sector for funding. In Japan, for example, there is a significant push toward infrastructure investment, says Nick Langley, Investment Director and Senior Portfolio Manager for RARE Infrastructure in Sydney, Australia. For instance, many of Japan’s tsunami-hit nuclear power stations still aren’t functional, so he expects the electricity sector to benefit. “Some of those [nuclear reactors] will come back on-line. But over the next couple of decades, [Japan] needs to build a lot of gas, fire and power stations, and we’re seeing chatter about that now,” says Langley.8

Brookfield A Leading Global Real Assets Manager

Asset Management

In today’s low-yield environment, helping your clients to meet their long-term investment goals means moving beyond traditional investments. One consideration is real assets, a non-traditional asset class that can deliver the growth potential of equities and the defensive characteristics of debt. An expert manager in the real assets category, Brookfield Asset Management sub-advises the Renaissance Real Assets Private Pool, a single multi-strategy portfolio of liquid real assets that dynamically rotates among the real asset sectors. “We concentrate on areas within real assets, like infrastructure, real estate and renewable power, and we have been investing in real assets for a 10

table Growth – Returns are long term and stable, given the length of many S infrastructure projects.9 Solid Diversification – Infrastructure investments generally have a low correlation to traditional asset classes, enhancing a portfolio’s diversification and reducing its overall volatility.9 teady Income and Inflation Protection – Companies managing S infrastructure projects tend to offer higher yields as projects mature and dividends are usually sustainable over the long term.9

Multi-Asset Strategies Multi-asset investing helps your clients’ portfolios gain exposure to a globally diverse mix of asset classes and styles in a single investment portfolio. Multiasset investing combines traditional securities, such as equities and bonds, with non-traditional assets. Your best option to tap into multi-asset strategies can be an all-in-one core portfolio that has access to multiple asset classes and the flexibility to move with today’s volatile markets.

Multi-asset strategies offer: Diversified Global Exposure – Access to a broad range of traditional and non-traditional asset classes may provide greater return potential.10 Carefully Managed Volatility – Multi-layer diversification helps mitigate the downside risk from single-asset or single-style exposure. Volatility management strategies may offer additional protection.10 Flexibility to Adapt to Changing Conditions – Tactical flexibility to adapt to the current market conditions helps to exploit timely growth opportunities and mitigate risk.10

long time,” says Craig Noble, CEO & CIO, Brookfield Investment Management. “Our competitive advantage lies in our focus.” Brookfield on the Real Assets Opportunity Institutional investors like pension funds include real assets as a significant portion of their portfolios. They use real assets to meet their need for predictable cash flows to meet pre-determined, long-term liabilities. Individual investors have very similar needs, particularly retirees and those nearing retirement. “Investors are drawn to real assets for a couple of reasons,” says Noble. One is the current income–in today’s low interest rate environment, “getting a 4 or 5% current income is a good starting point,” he says. “The second component is the growth potential–these companies tend to grow their cash flows by

Flexible Yield Strategies Flexible yield strategy investments move across fixed income sectors, including U.S. government securities, residential mortgage-backed securities and emerging markets debt, among others.

Adding flexible yield strategies can provide your clients with an attractive combination of high-yield-like returns with potential for lower volatility through:

“The characteristics of our flexible income strategy are absolute return focus in an attempt to have returns that are positive and a premium over benchmarks such as the London Interbank Offered Rate (LIBOR),” says Jeffrey Gundlach, CEO of DoubleLine®.11

Tactical Allocation – Tactical adjustments to sector weights can capture opportunistic gains from market fluctuations.

Gundlach explains that a good environment is one where credit markets, outside of government-guaranteed credit, “are stable to improving, and where returns would likely be higher under a rising-rate environment over, for example, a three-year horizon.” He adds, “Since we’re trying to outperform LIBOR on an absolute basis, the benchmark of LIBOR moving higher over time is beneficial to [flexible yield] programs.”11

iversified Sources of Yield – Access to a broader fixed income universe D can help boost yields compared to traditional fixed income sectors.

“Investors have been fearful of rising interest rates over the past five years and have gravitated towards strategies that will protect them better...” Gundlach says that investors can also look to flexible income strategies in rising-rate environments. “Investors have been fearful of rising interest rates over the past five years and have gravitated towards strategies that will protect them better, and perhaps have even higher returns, in an environment of rising interest rates.”11

DoubleLine® is a registered trademark of DoubleLine Capital LP.

mid-to-single digit year after year. These reasons translate into a portfolio that tends to have lower volatility, good income with some growth and also low correlation to other asset classes,” he says. The Investment Process Brookfield’s investment process consists of two main components. The first is the firm’s intensive bottom-up research. Within each vertical sleeve of real estate equities, infrastructure equities and real asset debt, “We build portfolios starting with understanding the underlying companies. We spend most of our time on company specific research and meeting with the management teams on a regular basis to build longer-term higher-conviction concentrated portfolios,” says Noble.

Active Duration Management – Can help contain risks and profit from opportunities within all interest rate environments.

Weighing the Alternatives With equity market returns declining and volatility increasing, it’s clear that the traditional methods of investing are no longer enough. Adding non-traditional assets and approaches to your client portfolios may be the key to helping them reach their investing goals.

Sources: 1 CIBC Poll, Angus Reid Forum, Jan 20-22/16 2 http://www.theglobeandmail.com/globe-investor/retirement/retire-planning/canadians-shifting-toward-more-globaldiversification-investor-poll-says/article28860664/ 3 http://www.theglobeandmail.com/globe-investor/investment-ideas/five-ways-to-successfully-invest-in-2015/ article22276028/ 4 CIBC news release, 2016 5 http://www.forbes.com/sites/greggfisher/2012/01/17/why-global-diversification-still-makes-sense/#f0d0814487b1 6 Renaissance Investments, RPIP Multi-asset Investing brochure, CIBC, 2016 7 https://www.nerdwallet.com/blog/investing/alternative-investments-arent-just-rich/ 8 http://www.advisor.ca/news/industry-news/where-to-find-infrastructure-opportunities-183618 9 Investing Fundamentals, Global Infrastructure, CIBC, 2016 10 Renaissance Investments, RPIP Multi-asset Investing brochure, CIBC, 2016 11 http://www.advisor.ca/news/industry-news/benefits-of-flexible-yield-strategies-206104 12 Renaissance Real Assets Private Pool brochure, CIBC, 2016

The second component is putting that into a diversified real assets strategy. This is more of an asset allocation approach where valuations can move differently in each of those sleeves over time. “One sector can be in favour while another is out of favour and that gives us a great opportunity to tactically flex the weightings depending on where we see fair value and better riskadjusted returns. It’s a global approach,” says Noble.

For more information on the The Renaissance Real Assets Private Pool or Renaissance Private Investment Program, visit rpip.ca and contact your Renaissance sales representative. 11

Access Multiple Real Assets Sectors in One Investment A diversified and tactical approach

SOLUTION HIGHLIGHT: RENAISSANCE REAL ASSETS PRIVATE POOL

The Renaissance Real Assets Private Pool is designed to balance multiple benefits including income, capital appreciation and inflation protection.

It offers the opportunity to invest in a single multi-strategy portfolio of liquid real assets that dynamically rotates across the spectrum of opportunities.

The pool’s broad diversification, combined with tactical portfolio management, provides investors with the potential for enhanced returns and lower volatility.

The pool is built on 4 underlying investment strategies 3 core strategies Designed to capitalize on diverse sources of return, to help the pool achieve more stable income and growth

INFRASTRUCTURE EQUITY

REAL ESTATE EQUITY

FIXED INCOME: REAL ASSETS DEBT

Focused on companies which own and operate infrastructure assets worldwide

Focused on companies which own and operate real estate assets worldwide

Publicly traded debt of companies in the real assets sector

Neutral weighting: 50% Range: 40% - 60%

Neutral weighting: 40% Range: 30% - 50%

Neutral weighting: 10% Range: 0% - 20%

1 opportunistic strategy Helps to manage portfolio risk and take advantage of market opportunities NATURAL RESOURCE EQUITY Global natural resource companies in energy infrastructure, timber, agriculture and commodities

RENAISSANCE

Private

Neutral weighting: 0% Range: 0% - 10%

INVESTMENT PROGRAM

Access this mandate via the Renaissance Private Investment Program rpip.ca PROGRAMME DE PLACEMENTS

Privés RENAISSANCE

integrated tactical management – Allows for movement within these sectors based on a relative value assessment of the best opportunities. This provides the potential for enhanced returns and helps manage overall portfolio risk.

Brookfield Asset Management Inc. | A leading global real assets manager

$240 billion1

100 year History

700 Investment Professionals

of real assets managed globally

owning and operating real assets

in 100 offices across the world

Property / $151 billion • One of the largest global property investors • Over 400 million square feet2 of office, retail, industrial, multi-family and hotel investments

Infrastructure & Renewable Power / $64 billion • 100 year history of infrastructure investment, ownership and finance • Ports, rails, pipelines, transmission lines and renewable assets located across the globe • One of the world’s largest private owners of hydro generation assets

Natural Resources / $3 billion • Over 30 years of experience directly owning, managing and financing agrilands and timberlands • ~4 million acres of land • Expertise in paper/forest products, metals/mining and energy companies globally As of March 31, 2016; Assets under management for Brookfield Asset Management Inc. is approximate and includes its affiliates. 1 Approximate figure; exceeds individual breakdowns as it includes over $20 billion of private equity. Also includes $1 billion in asset management and other services, cash and financial assets and other assets. 2 As of December 31, 2015 and includes active developments and current projects in planning.

“Anyone who stops learning is old, whether at 20 or 80. Anyone who keeps learning stays young.” – Henry Ford

The countdown is on as the final days of summer melt away into the fall, the time of year that many of us associate with a return to school, classes and learning. But knowledge can be acquired and skill-sets developed anywhere; it happens all the time and is known as lifelong learning. Whether you are trying to increase your industry knowledge, or just want to learn how to better appreciate wine, becoming a lifelong learner can actually provide you with more opportunities, improve your quality of life, and keep you young.1

People who are truly effective apply themselves to constant learning and competing against themselves to grow and learn day by day. Here are some tips on how to live the daily adventure of learning:

Lifelong Learning is Life Affirming Aside from the obvious advantage of gaining additional knowledge, a Canadian Council on Learning report found that, “the value and contribution of learning is evident at all stages of life.” The report went on to say that lifelong learning can improve your health and well-being, help

Learn how you learn Determine your own preferred learning styles and what learning techniques work for you. For example, if you’re a visual learner, watch online YouTube tutorials.4

you live longer, make you more likely to engage in your community, make you more employable and increase your

Assess your talents and interests

creativity. In short, you’ll be more satisfied with life.2

Becoming a Lifelong Learner

Try many different things; don’t limit yourself. You won't know what you’re good at until you've tried.4

Many of the most significant people in history were lifelong learners. Whether you learn through experience, books or other means, becoming a lifelong learner will put you in the company of learning enthusiasts including Ray Bradbury,

Vacation as Education

Alexander Graham Bell and Florence Nightingale, to name but a few. Bradbury, one of the most celebrated 20th- and 21st-century American sci-fi writers, didn’t attend university— his impressive education was largely due to independent reading. Bell, best known as the inventor of the telephone and telegraph, was self-taught. He only attended a few lectures in college, but continued to learn and experiment throughout his life. Nightingale, a celebrated nurse and pioneer in nursing education, was self-taught with some help from her father.3

Relaxation and laziness are not the same things; a vacation is the perfect opportunity to challenge yourself and expand your horizons. Imagine: Sipping wine in Tuscany with a winemaker, photographing animals in Africa with a professional photographer, or digging with archaeologists in the Southwest United States. Educational vacations combine your favourite activities, allowing you to experience different cultures and learn new skills. Here are some vacation ideas where you might learn a thing or two.

Look at learning as an exploration, not a chore

Create

Learn things that you need to learn alongside things you love to learn. For example, if you’re learning to increase your on-the-job knowledge, go beyond it and look at the history, case studies, different applications, etc., to make your learning experience more well-rounded.4

Not all learning comes from outside you. In fact, some of the most powerful learning happens when you are creating or formulating something for yourself. Creation can be artistic or scientific; physical or intellectual; social or solitary. Try different media and methods to discover and refine the ones you like the most.4

Learn the basics

Evaluate what you learn

By learning some math and natural-science concepts, you’ll be able to remember, connect and figure out all kinds of complicated things. Try some free OpenCourseWare, TED Talks or iTunes University for comprehensive presentations from famous professors and experts in their fields.4

Does it make sense? Is it true? Who said so? Examine what you have learned and develop your own opinions.4

Read, read, read

Joseph Joubert, who wrote on philosophical, moral, and literary topics, said “To teach is to learn twice.” In teaching others, you will find that you learn even more than your students. Not only will you need to have a good grasp of your materials, you will need to respond to the queries of your students, extending your understanding beyond what you have already considered.4

Keep reading and you will never stop learning. Reading will help you to learn the discoveries and mistakes of others who have gone before you; reading is, in effect, a shortcut so that you don’t have to learn things the hard way.4

Teach others

Broaden your definition of learning The Theory of Multiple Intelligences by Harvard’s Howard Gardner has identified seven distinct intelligences ranging from logical to musical. Take a look at this theory and consider how you might fit in, and where you can improve.4

Out of this world For three days at the U.S. Rocket and Space Center in Huntsville, Ala., adult “astronauts” can go on mock space missions, launch model rockets and try out astronaut training tools, including a one-sixth gravity chair and a multi-axis trainer. Campers who would rather forgo some of the more gruelling aspects of astronaut training can work at mission control for the launch.5

Down to earth As a northern country, Canada has one thing to offer that many countries don’t: glaciers. A number of companies offer glacier-trekking vacations that will take you right out onto the rugged icefields of an ancient glacier. While on your hike, guides will explain how glaciers work, how they affect the geography and geology of the area, and how climate change is impacting not only the glaciers but the environments and communities around them.6

For the Mind If your interests run more towards the more cerebral pursuits like literature, art, music, and film, join a week-long seminar in Toronto. For five days, seminar groups gather for lively morning discussions and, in the afternoons and evenings, participate in topical talks, walking tours, plays, concerts and film screenings. The environment is one where differing points of view can be exchanged, and old beliefs and new ideas can be re-examined.7

Sources: 1 http://www.skillsyouneed.com/learn/lifelong-learning.html#ixzz4CiBmp3Lk 2 https://serclab.wordpress.com/2013/09/18/the-powerful-benefits-of-lifelong-learning/ 3 http://www.onlinecollege.org/2011/06/06/25-famouslifelong-learners-who-inspire-us-all/ 4 http://www.wikihow.com/Become-a-Lifelong-Learner 5 http://adventure.howstuffworks.com/10-educational-travel-adventures.htm 6 http://www.brewster.ca/activities-in-the-rockies/brewster-attractions/columbia-icefield-glacier-adventure/ 7 http://www.classicalpursuits.com/toronto-pursuits-2015/

Service! Service! Service! THANKS TO OUR SUPPORTERS

Without the support of advisors like you, Renaissance Investments would not enjoy the privilege of helping so many Canadians realize their investment goals. Here are two 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:

We love our clients and the challenges that go along with this business. We think of ourselves as problem solvers and solution providers. Every client situation is unique and the challenge of providing solutions is what keeps us constantly engaged.

Service! Service! Service! We communicate with clients during all market cycles, speaking and meeting with them more often than the average advisor. This is especially critical in volatile markets and during unusual market events like the recent Brexit decision.

What is your personal formula for building strong client relationships?

Favourite hobbies:

We spend time in discovery to fully understand client goals and make sure we use our partners (high-net-worth planning, estate planning, and wills and trusts). The average client heading into retirement hasn't adjusted their asset allocation as they moved through different life stages. We educate clients and adjust their overall asset allocation, reducing equity exposure. Each client receives a financial plan before any money is invested.

Both of us are active skiers. Our clients are from all different parts of British Columbia, Alberta and Ontario, giving us opportunities to check out many great ski hills.

What are some of the most common client concerns you hear and how do you address them? The main concern is lack of contact. Between the two of us and our segmentation strategy, clients receive more contact than ever before. Spending time and money on quarterly client appreciation events definitely sets us apart from our peers.

What is the one item you canâ&#x20AC;&#x2122;t be without? Our trusted assistants, Jessie and Lynn. They have over 20 years combined experience in the industry and have been with us since day one.

Dane Bird Vice President, CIM

Brandon Moore

Vice President, CIM, CFP, FMA, FCSI

Firm: TD Wealth Private Investment Advice Location: Kelowna, BC Years in Business: 15 Team Members: 4

How are you preparing your clients and your business for the Great Transfer of Wealth? We spend a lot of time on estate planning during discovery. By looking at estate projections and understanding how a client wants to transition assets to the next generation, we can provide tax-efficient solutions early in the relationship. How are you diversifying client portfolios outside of Canada? Generally, we defer to experienced fund managers who have "boots on the ground" in the U.S., Europe, Asia and emerging markets. Weâ&#x20AC;&#x2122;re comfortable picking investments in domestic markets, but internationally we defer to managers who know their markets better than we do.

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

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

1. epteatip

2. ienlesdc

3. mrenoayt

4. looine

5. gehndiehte

6. orsprep

7. anuitsm

8. tgessritae

9. rdtvteaagi

7 1

10. clictlayta

8 Source: 4puz.com

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

Check your answers at renaissanceinvestments.ca/magazine/answers/ 18

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

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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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. Renaissance Investments and Renaissance Private Investment Program are offered by CIBC Asset Management Inc. 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. *Refer to the simplified prospectus for more information on management fee reductions, family account linking and multiple purchase options. 02001E(201607)