Contact | News Media | FAQ | Blog

About MPW

Investment Philosophy

At Montag Private Wealth, we believe in a flexible approach to financial management – from building a more conservative 100% fixed income investment grade portfolio to one that is more complex and diverse and as a result, may be exposed to more market movement and in turn, possibly more return. Our research process goes beyond finding quality or growth stock. We look at the entire capital structure of a company to find undervalued stocks or fixed income that will produce a high return adjusted for risks. The time spent studying and delving into one specific company can lead to an investment in corporate debt, convertible debenture, high yield bond or preferred and common shares. This philosophy allows us to explore all opportunities for a sound investment in fixed income, as well as in small to mid and large capitalization. We work hard to increase our information ratio and we have the knowledge to use stock options as a means of reducing risk in individual positions if required. We are always inclined to invest in yield-producing assets, or when appropriate, use tools, such as covered call or writing put, because they bring value and create a cushion, or more specifically, a trading price floor in a downturn market. Our firm is driven by research and selecting assets through a meticulous process to achieve the best performance possible.

Read more

Investment Philosophy

At Montag Private Wealth, we believe in a flexible approach to financial management – from building a more conservative 100% fixed income investment grade portfolio to one that is more complex and diverse and as a result, may be exposed to more market movement and in turn, possibly more return. Our research process goes beyond finding quality or growth stock. We look at the entire capital structure of a company to find undervalued stocks or fixed income that will produce a high return adjusted for risks. The time spent studying and delving into one specific company can lead to an investment in corporate debt, convertible debenture, high yield bond or preferred and common shares. This philosophy allows us to explore all opportunities for a sound investment in fixed income, as well as in small to mid and large capitalization. We work hard to increase our information ratio and we have the knowledge to use stock options as a means of reducing risk in individual positions if required. We are always inclined to invest in yield-producing assets, or when appropriate, use tools, such as covered call or writing put, because they bring value and create a cushion, or more specifically, a trading price floor in a downturn market. Our firm is driven by research and selecting assets through a meticulous process to achieve the best performance possible.

If required, we may also supplement our in-depth portfolio offering with ETFs. They are good tools but should not be seen as a replacement for active portfolio management because on their own, they do not manage risk as an active portfolio manager would. Moreover, owning ETFs does not protect your portfolio against a downturn. They are a viable option if you plan on a long-term program but it is well documented that because investors trade them at high rates, ETFs that replicate indices do not deliver the expected return. It is crucial that any portfolio strategy must have a plan in place to mitigate risk and anticipate potential changes in the market. It is very easy to stick to a particular investment strategy when the assets are increasing but not when there is a decrease. In turbulent markets, investors often sell their ETFs at the wrong time and they rarely capture or achieve the index performance in the long run. Changing or positioning the portfolio to reduce risk must be performed in anticipation of a down market, not during and certainly not after.

New facts arising in the ETF market suggests a shift from active investment management to passive investment management, possibly leading to a more favorable market for stock pickers. In other words, active fund managers may now more easily outperform index trackers funds as experienced in 2013. As a reminder, tracker funds buy with no consideration whether a company is good or bad, thereby ignoring the obvious winners and losers. When the majority follows a strategy, it starts to be less efficient and the use of active management becomes relevant.

While many other investment firms have finished their research processes, which are limited to stocks and bonds, we bring a secondary process to look at how we can add value and provide greater return with less or the same amount of risk. Delving further we can look at alternative strategies that might reduce portfolio volatility and maintain or enhance portfolio return, while trying to keep volatility at its lowest. Alternative strategies can be considered and added, such as equity market neutral, alpha extension 130/30 (equity or bonds), long/short equity, etc. Hedging currencies is also an option. Even a small portion of the portfolio can be diversified in real estate hard assets for the yield and the low correlation with the equity and bond market. All of these approaches exist but need to be monitored and properly implemented. Moreover, there is a cost to implement these strategies, so a thoughtful discussion about cost benefit must be conducted prior to moving forward. Our main concern is to ensure that we meet our clients’ needs and adhere to their risk tolerance. Finally, it must also meet their capital preservation and cash flow needs when the latter is required. We are not just active managers; we are proactive managers performing secondary research beyond stocks and bonds and ensuring it is sound. This is what makes our investment approach unique.

  • New Challenges

    Investors and their wealth portfolio managers need to rethink their overall approach to portfolio construction. Thinking in terms of risk diversification is not a luxury anymore but a must for anyone who wants to protect their asset from higher volatility in both bonds and equity asset classes.

    Alternative Investments

    Alternative investments are all other investments in an asset class or strategy that do not have a long position in stock or bond. This can include: real estate (other than a house), real assets, private equity, commodities, options, currencies, futures, collectibles, convertible bonds, emerging market debt, equity market-neutral, global macro strategy, etc.

    Read more about Portfolio Construction

     

  • We believe investors often overlook active risk management and have followed suggestions that they should go on their own to save on management fee. We are confident that our level of dedication and expertise goes beyond the potential savings an individual investor may realize by ‘Do-it-Yourself’ investing.

    Firm Philosophy: Debunking Myth

    Much can be said about risk!

    Diversification

    Investors who believe that a portfolio is well diversified if it includes equity and bonds should think twice. The fact is that the correlation of returns between a 60/40 portfolio and a 100% equity portfolio over the last 15 years has been 0.99.

    Risk-parity

    What is risk-parity? It is actually a strategy that, in the long run, may - by its construction -provide equal risk exposure to assets that typically perform well in different economic environments.

    Leverage

    Leverage is a tricky concept. Almost every investor has some and almost everyone is weary of it. The average debt-to-equity ratio of companies in the S&P 500 is ~1:1, on average.

    Read more about Active Risk Management

     

  • Registration

    Montag Private Wealth is a portfolio management firm registered with the Ontario Securities Commission in the Province of Ontario and the autorité des marchés financiers (AMF) in the Province of Québec.

     

  • Get a Second Opinion on Your Investment

    Read more about Second Opinion