Investment Philosophy

In managing our clients’ portfolios, we adhere to quality-based principles and are disciplined in our approach.

Our investment philosophy is based on

Value

Our discipline, patience, and research efforts allow us to maintain a strong understanding of the companies that we own, all the while keeping our focus on discovering undervalued securities.

Diversification

We believe in a broad degree of diversification and do not believe in placing big bets on any particular outcome. No matter how attractive the prospects are for a given company, a given industry, or a given country, it is difficult to know for sure to what extent the positive outlook is already reflected in current prices. Unforeseen negative surprises can and will occur.  A diversified approach allows for more consistent, predictable long-term results.

Quality

The vast majority of investments in our portfolios are comprised of mid to large capitalization, high quality securities. This is true in the equity component as well as on the fixed-income side where we do not believe in lowering our quality standards to reach for some additional yield. We will, from time to time, take a smaller position in unique opportunities that present themselves that are more junior or speculative in nature where the risk/reward ratio appears especially attractive.

Our investment philosophy is based on

Value

Our discipline, patience, and research efforts allow us to maintain a strong understanding of the companies that we own, all the while keeping our focus on discovering undervalued securities.

Diversification

We believe in a broad degree of diversification and do not believe in placing big bets on any particular outcome. No matter how attractive the prospects are for a given company, a given industry, or a given country, it is difficult to know for sure to what extent the positive outlook is already reflected in current prices. Unforeseen negative surprises can and will occur.  A diversified approach allows for more consistent, predictable long-term results.

Quality

The vast majority of investments in our portfolios are comprised of mid to large capitalization, high quality securities. This is true in the equity component as well as on the fixed-income side where we do not believe in lowering our quality standards to reach for some additional yield. We will, from time to time, take a smaller position in unique opportunities that present themselves that are more junior or speculative in nature where the risk/reward ratio appears especially attractive.

flexibility and expertise

Asset Allocation

We believe decisions regarding an appropriate mix of cash, fixed income, and equities are crucial to satisfying expectations regarding long term portfolio performance.

Appropriate asset mix decisions can only be made after a thorough analysis of each client’s circumstances and tolerance for risk. We do not believe that frequent wholesale changes to asset mix or attempts to time the market add value over the long term. Should changing capital markets or personal circumstances warrant a shift in asset mix, Dorchester’s portfolio managers have the flexibility and the expertise to adjust portfolios accordingly.

 
 

a disciplined approach

Portfolio Construction

At Dorchester, we maintain a disciplined approach to portfolio construction. Research drives this process and is based on in-house fundamental, quantitative, and technical analysis which is complimented with the best of outside research provided by brokerage firms across the globe and top-ranked private services retained by our firm.

Broad, global themes are discussed regularly with a view to taking advantage of any top-down insight that may be understood. Capital market valuations are considered in implementing our recommendation regarding asset mix, industry weights, and specific company exposures.

Solid Results

Equity Strategy

Sound fundamental analysis and careful security selection are essential to achieving solid results within Global equity markets. We view ourselves as partners in the businesses we invest in, not as speculators.

Through constant screening and analysis, we build diversified portfolios of quality, mid to large capitalization companies run by capable and motivated management. Our ongoing research effort includes regular communication with company management and senior analysts from the investment community.

We tend to take a long-term view, however; portfolios are continually monitored and should a company unexpectedly change strategy or fail to meet our expectations, we can and do assess the situation promptly.

 

security of principal & income

Fixed Income Strategy

The core of the fixed income section of our portfolios is created with security of principal and income as primary considerations. High quality bonds provide diversification, reduce volatility, and generate secure, consistent, and predictable income. To maximize total return without taking unnecessary risks, we invest in high-quality short to intermediate term bonds. Our bond holdings are predominantly very marketable and provide flexibility for shifts in policy.

Our individually managed accounts allow us to tailor each portfolio to our client’s specific goals and objectives. One of the more important aspects to our management style is our sensitivity to tax issues. Insight into our clients’ tax status is the basis of the understanding needed to make appropriate fixed income investments and maximize the total portfolio’s return. Where appropriate, we do make use of value-added income vehicles such as convertible bonds and preferred shares.

The firm adds value in fixed income portfolio management in a number of ways. First, we consider key macroeconomic and political issues, money flows, currency markets, inflation trends and the factors driving Central Bank policy to assist in drawing conclusions about duration and bond term. Second, we monitor credit spreads across industry sectors and issuers and control the weights invested in Federal, Provincial, and corporate debt to take advantage of appropriate yield pick-up opportunities between comparable credits. Third, the fixed income market yield curve structures are analyzed in order to identify overdone sentiment swings or variances that provide trading opportunities or assist with improving the timing of buy and sell decisions. It is also worth noting that we have access to wholesale pricing when we buy and sell on behalf of our clients and over time the elimination of unnecessary retail spreads clearly enhances returns. Finally, our equity research and the understanding of the general health of the economy, the relative strength of various sectors and the financial soundness of the specific issuer clearly assist in adding value.

Portfolio Administration & Fees

Communication

The partners and portfolio managers at Dorchester are directly accessible to our clients. Regular communication with our clients is essential to meet and hopefully exceed expectations and to build trusted long-term relationships.

Reporting

We believe in being fully transparent with our clients. Our customized Portfolio Valuation Reports are designed to provide comprehensive and valuable information. All security positions, cost and independently sourced current market values, as well as expected annual income and portfolio yield are readily displayed. A detailed breakdown of asset allocation in dollar amounts and percentage across sectors and currency is included. Individual equity holdings and weightings are categorized by industry group to provide a clear view of our various exposures at each reporting period. Our transaction report details year to date purchases and sales and deposits and withdrawals. To assist with annual tax filings, we supply a capital gains/losses report, foreign holdings report, and receipt for investment management fees. Our material is available monthly or quarterly to meet client preferences. As well, online access is available if desired. Our quarterly reports include our Economic and Market Commentary.

Custodian Services

Dorchester does not hold cash or securities on behalf of our clients. Securities and cash are held at a custodial agent, usually a major brokerage firm or trust company. Our largest custodial relationship is with National Bank Independent Network (NBIN).  The custodian issues monthly statements and tax reporting material which are sent directly to our clients.

Fees

Investment management fees are billed quarterly in arrears based on the market value of the assets under management. Fees will vary based on portfolio size and are generally a fraction of the expense ratios associated with many mutual funds or dealer sponsored wrap accounts. For Canadian clients, investment management fees are fully tax deductible for their non-registered accounts.

Resources

Quarterly Economic
and Market Comments

For your perusal, we have included our Quarterly Economic and Market Comments from earlier this year and last year.