C.F.G. Heward Investment Management Ltd. utilizes a disciplined investment management process. The Investment Policy Committee (IPC) designates investment mandates, oversees the due diligence process, and has the final authority on all investment decisions. Decision-making at the IPC is governed by a team approach to ensure that a diverse set of opinions is considered. The investment management process consists of four dimensions:
- Asset Allocation: the IPC surveys macroeconomic variables to determine the strategic asset allocation involving cash and cash equivalents, equities, and fixed income securities (bonds, preferred shares). Tactical allocations are utilized to take advantage of short to medium term trends.
- Geographic Allocation: the IPC sets ranges for investments in Canada, the United States, and globally based on said macroeconomic variables with particular focus on exchange rate movements, long-term interest rate fluctuations, and country specific data.
- Sector Allocation: macroeconomic variables are also used to determine fundamentally attractive sectors that are entering cyclical and secular up-trends and provide a steady income stream over the long-term. Within each sector, the top trend beneficiaries are selected to form a focused list of securities.
- Security Selection: the process consists of four elements:
- Industry Overview
- Fundamental Analysis
- Management Review
- Valuation
The valuation process concludes with the derivation of short-term and long-term buy/sell targets. Technical analysis indicators are often utilized to adjust fundamental targets. By this point, the list has been narrowed down to a target list of 35-45 stocks.
The IPC then executes investment decisions in compliance with the aforementioned targets. It is important to note that it is not uncommon for the IPC to adjust targets to reflect market conditions.