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Yield on original cost (YOOC) is determined by taking the dollar amount that an investor receives in dividends over the cost paid for those securities. It is particularly relevant to dividend growth portfolios because as dividends grow so does the YOOC. Growing dividends take advantage of the power of compounding and reinvesting dividends. The other benefit is that companies with increasing dividends are often better risk-adjusted performers as well. Current yield can mask the underlying health of a business if, for example, a company is paying out more than it should in dividends in order to keep their current yield high.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
On February 28, 2018 Bristol Gate Capital Partners Inc. officially opened Toronto Stock Exchange (TSX)
Richard Hamm, Chief Executive Officer, Bristol Gate Capital Partners Inc., joined Dani Lipkin, Head, Business Development, Exchange Traded Funds, Closed-End Funds, and Structured Notes, TMX Group, to open the market to launch their initial suite of two Exchange Traded Funds (ETFs): Bristol Gate Concentrated Canadian Equity ETF (BGC); and Bristol Gate Concentrated US Equity ETF (BGU/BGU.U). Bristol Gate is a Toronto-based investment manager that uses proprietary predictive analytics technology combined with a fundamental driven process to select portfolio companies. BGC; and BGU/BGU commenced trading on Toronto Stock Exchange on February 21, 2018.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
By: James Lord
Bristol Gate Capital Partners, a boutique Toronto-based investment manager, has unveiled its first ETFs with the launch of the Bristol Gate Concentrated Canadian Equity ETF (BGC CN) and Bristol Gate Concentrated US Equity ETF (BGU CN) on the Toronto Stock Exchange. The funds are actively managed and invest in relatively concentrated portfolios of Canadian and US-listed equities respectively with a focus on dividend payers. BGC will invest in companies from within the S&P/TSX Composite Index while constituents for BGU will be selected from the S&P 500 Index. Bristol Gate employs a proprietary methodology that forecasts dividend growth for the coming 12 months and uses fundamental analysis to determine the firms most likely to consistently grow their dividends into the future. Constituents are equally weighted within the portfolio which is rebalanced on a quarterly basis.
The firm uses machine learning in constructing portfolios which it says helps it to improve risk/return profiles and avoid the emotional bias in the investment process. It also sets a dividend hurdle rate annually based on the lowest predicted dividend growth rate in the portfolio. If a company falls below the dividend hurdle it will likely be sold from the portfolio.
BGC currently has 25 constituents. The largest sector exposures are fairly evenly split between industrials (16.2%), financials (16.0%), consumer discretionary (15.9%), consumer staples (15.8%) and utilities (12.0%). Its allocations are notably underweight financials which accounts for 35.3% of the benchmark, and overweight consumer staples and consumer discretionary which account for just 3.6% and 5.5% respectively in the benchmark.
BGU currently has 22 constituents with significant exposure to the industrials (27.3%), consumer discretionary (23.2%), information technology (18.0%), health care (13.6%) and financials (9.0%) sectors. These allocations are notably overweight industrials and consumer discretionary which account for 10.3% and 12.6% of the S&P 500 respectively. It is also underweight financials and information technology which hold weights of 14.9% and 24.2% in the benchmark respectively. The funds trade in Canadian dollars, and a US dollar-denominated share class for the US equity ETF is available under the ticker BGU.U CN. Each fund has management fees of 0.70%.
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Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
February 23, 2018
Clare O’Hara
Posted with permission from The Globe and Mail
Actively managed exchange-traded funds continue to gain assets as more new products are launched.
Bristol Gate Capital Partners, a boutique investment manager, became the 29th firm to join the roster of Canadian ETF providers this week, bringing two equity funds to the Toronto Stock Exchange: Bristol Gate Concentrated Canadian Equity ETF (BGC) and Bristol Gate Concentrated U.S. Equity ETF (BGU).
For both funds, Bristol Gate employs a methodology that forecasts dividend growth for the coming 12 months and uses fundamental analysis to construct a portfolio from the best dividend growers for the coming year. It invests in dividend-paying equity securities selected primarily from the S&P/TSX Composite Index for the Canadian fund and the S&P 500 Index for the U.S fund.
Canadians are more likely than investors elsewhere to put their money into actively managed ETFs, which usually have higher fees than passive funds. Canada accounts for almost 22 per cent of all active ETF assets in the world, second only to the United States, which accounts for more than 65 per cent.
Unlike a traditional ETF that follows a certain index, actively managed ETFs are more like mutual funds, with their own dedicated portfolio management.
As more active managers enter the ETF space, the number of active funds found on the product shelf is increasing in Canada. At the end of 2017, two other privately-owned investment shops launched active ETF businesses. Equium Capital Management Inc., a multiasset investment manager based in Toronto, launched the Equium Global Tactical Allocation Fund (ETAC) in November. Arrow Capital Management Inc., also based in Toronto, introduced an actively managed bond ETF, the Exemplar Investment Grade Fund (CORP).
At the end of January, the Canadian active ETF industry had US$17-billion assets under management in 148 ETFs. That is up from US$10-billion in assets in 104 ETFs in 2016, according to a recent report by ETFGI, a London-based independent research and consultancy firm focused on the global ETF industry.
That number is expected to rise as more mutual fund companies – including the banks – can no longer sit on the sidelines.
“I believe we’ll see more of these types of companies launch ETFs in addition to traditional asset managers and mutual fund companies,” said Daniel Straus, an ETF analyst for National Bank Financial.
“For companies like Bristol Gate, Equium Capital, and Arrow Capital, an ETF is a simple way for them to widely reach clients who might otherwise balk at signing an OM [offering memorandum] for a different fund offering. [ETFs] are easy for clients and potentially cheap to operate if they grow to scale beyond initial set-up and filing costs.”
In 2017, active strategies saw renewed activity in the ETF space, especially on the fixed income side, Mr. Straus said in a year-end report. Among fixed-income ETFs, active products captured 41 per cent of the inflows, considerably above their 19-per-cent share of total fixed-income ETF assets. Major contributors were new active bonds from Pimco, and active preferred share ETFs from RBC, Horizons and Dynamic/iShares.
“The increasing popularity of this category speaks to the conviction shared by Canadian investors that there might be a place for active management among opaque and difficult-to-access asset classes,” Mr. Straus said.
BMO Asset Management is the largest active ETF provider in terms of assets, with US$6.3-billion, reflecting 36.1-per-cent market share in the active space; Horizons is second with US$3.3-billion and 19.5-per-cent market share, followed by iShares with US$1.60-billion and 9.3-per-cent market share.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
TORONTO, Feb. 21, 2018 (GLOBE NEWSWIRE) — Bristol Gate Capital Partners Inc. (“Bristol Gate”) announced today the launch of Canadian dollar-denominated units of Bristol Gate Concentrated Canadian Equity ETF (TSX:BGC) and Bristol Gate Concentrated US Equity ETF (TSX:BGU) and U.S.-dollar denominated units of Bristol Gate Concentrated US Equity ETF (TSX:BGU.U) (together, the “Units”).
Bristol Gate Concentrated Canadian Equity ETF seeks to generate long-term growth of income and capital by investing primarily in a concentrated portfolio of publicly-traded equity securities of Canadian companies that pay a dividend. In order to achieve the ETF’s investment objective, Bristol Gate employs a proprietary methodology that forecasts dividend growth for the coming 12 months and uses fundamental analysis to construct a portfolio from the best dividend growers for the coming year. It invests in dividend-paying equity securities selected primarily from the S&P/TSX Composite Index.
Bristol Gate Concentrated US Equity ETF seeks to generate long-term growth of income and capital by investing primarily in a concentrated portfolio of publicly-traded equity securities of U.S. companies that pay a dividend. In order to achieve the ETF’s investment objective, Bristol Gate employs a proprietary methodology that forecasts dividend growth for the coming 12 months and uses fundamental analysis to construct a portfolio from the best dividend growers for the coming year. It invests in dividend-paying equity securities selected primarily from the S&P500® Index.
The initial offerings of BGC, BGU and BGU.U are closed and the Units will be available for trading on the Toronto Stock Exchange when the market opens today.
Important Risk Information
Commissions, management fees and expenses may all be associated with investments in ETFs. Investors should carefully consider an ETF’s investment objectives and strategies, risks, fees and expenses before investing. The prospectus and ETF facts contain this and other information. Please read the prospectus and ETF facts carefully before investing. ETFs trade like stocks, fluctuate in market value and may trade at prices above or below the ETF’s net asset value. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
Globe Newswire Link: Bristol Gate Capital Partners Inc. Launches Two ETFs
About Bristol Gate Capital Partners Inc.
Bristol Gate is a Toronto-based investment manager that uses proprietary predictive analytics technology combined with a fundamental driven process to select portfolio companies. Bristol Gate’s investment strategy is focused on identifying and selecting stocks that are expected to have the greatest one-year forward dividend growth. This results in a portfolio of highly predictive businesses that exhibit less volatility, better capital preservation and faster recovery from market declines. For further information, please visit www.bristolgate.com.
For more information, please contact:
Jamie Houston
Relationship Manager
416-921-7076 x 285
Jamie.houston@bristolgate.com
The firm launched two actively managed ETFs, one based on its U.S. strategy and the other on a similar Canadian strategy.
By: Barry Critchley
A few miles north of the financial district in Toronto sit the offices of Bristol Gate Capital Partners, a privately held money manager which, over the past nine years, has posted results from investing in U.S. stocks, that place it in the top 10 per cent of managers around the world.
In other words, performance, with a more than commensurate risk management focus, doesn’t come from proximity to the rest of the investment professionals but from implementing a carefully and scientifically based approach to investment management, in this case picking the best 22 stocks from the S&P 500 index.
Since May 2009, when the U.S. strategy started, to Jan. 31, the firm recorded an 18.43 per cent annual compound rate of growth – or 200 basis points above the 16.46 per cent gain for the S&P 500 over the same period. The numbers are gross of fees.
The firm, which manages about $1 billion for institutions and high net worth individuals, uses a unique evidence-based investment approach that combines data science with rigorous fundamental analysis to pick those 22 stocks.
But the 22 are all selected because they are all dividend growers — companies which can be expected to grow their dividends and provide more income to the portfolio over the next year.
It’s the way the 22 are selected that’s Bristol Gate’s secret sauce: the process starts with those companies that have revenue growth and is then adapted for operational performance (essentially growth in cash flow). Put the two together and the firm’s proprietary methodology, that it says leverages machine-learning algorithms, predicts the 22 stocks with the highest dividend growth for the upcoming 12 months. Over the past year, the U.S. strategy posted an 18.9 per cent growth in dividends.
On all three measures, growth in sales, cash flow and dividends, Bristol Gate’s equally weighted portfolio, which is rebalanced each quarter, is in the top 10 per cent of all funds. But rising dividends is not a natural outcome: 34 per cent of the members of the S&P 500 have cut dividends over the past 23 years.
Now the singularly-focused firm, whose U.S. strategy had only been available to accredited investors, and whose two co-chief investment officers are Peter Simmie and Reyer Barel, is taking the next step in its development.
This week it launched two actively managed ETFs, one based on its U.S. strategy and the other based on a Canadian strategy that uses the same methodology. In this way, investment advisors and their clients will have better access to investment strategies like Bristol Gate’s.
“Our objective has always been to identify opportunities that can support our investors portfolios through capital growth and by providing them more income in the future as well,” founder Richard Hamm said in an interview.
Hamm stressed the two ETFs will be actively managed. “We will be combining the firm’s skills in data science and fundamental analysis. We won’t be using a rules-based passive model.”
And Bristol Gate is not embarking on this new development blind: it does have a track record for both its U.S. and Canadian strategies.
In July 2013, it put its own money into the Canadian strategy and since then has been managing the fund using the methodology that will be used for the Canadian ETF.
Performance has been stellar: according to Global Investment Performance Standards verified numbers, that real money has generated a 13.7 per cent annual compound rate of return or 440 basis points above the TSX’s return over the same period. (Those numbers are gross of fees.) The Canadian fund, which is underweight the financial and energy sectors, is home to 25 stocks.
The National Post Bristol Gate brings successful investing formula to ETF market
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
Investors turn to managed investment products to help save them time and provide portfolio diversity all-in-one. However, like a color spectrum there are many options and the level of management varies. In most cases, these can be accessed through ETFs. On the one side are truly passive investments which follow simply follow an index. They attempt to mimic market returns (subtracting the management fee) but also take on market risk. They often have very low fees – as an example, buying an S&P500 ETF provides you with the diversity of all 505 names in the index while only paying around 5-10 basis points.
Across the spectrum, the broad-based passive gets sliced and diced by various attributes such as by sector, style, dividend history etc. As it gets more specific, the cost generally increases and performance starts to deviate away from the broad-based benchmark. If you purchase a Russell 2000 Growth ETF and Growth is what is driving the market in a given year, then that holding will outperform.
On the furthest end of the spectrum is Smart Beta and Active Management. Traditionally Smart Beta has been associated with ETFs and Active Management with Mutual Funds. Smart Beta ETFs attempt to beat their benchmarks by creating rules to tilt the portfolio a certain way. For example, a Quality ETF might select stocks that perform well in certain factors that a manager deems to be Quality. This is generally all done by computer with no human intervention involved. Active Management, on the other hand, may use computers to assist in the process but decisions are made by a portfolio manager who is attempting to outperform the index. Because of their experience and expertise, they believe that they are in a better position to outperform.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.
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