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  • Stephen Hafner

    Stephen Hafner

    As a managing director of Newport Private Wealth, Stephen Hafner brings more than 20 years experience in investment management and corporate finance. With extensive experience in private investment opportunities, Steve also is part of the investment committee at Newport Private Wealth.

    Prior to joining Newport Private Wealth, Steve was a vice president with TAL Private Management Ltd. where he was responsible for managing the personal wealth of individuals. Prior to TAL Private Management Ltd., he worked with Connor, Clark & Co Ltd. and Barclays Bank of Canada. Over the course of his career, Steve has worked with some of Canada’s wealthiest families helping them to develop suitable investment policies and managing their investment assets. Steve has also used financial planning strategies to help successful Canadian entrepreneurs maximize tax efficiency and keep the money they have earned.

    Steve completed his Chartered Financial Analyst designation in 1993 and received a BA (Management, Economics) from the University of Guelph in 1986.

    In 2011 Steve was in the inaugural group to be awarded Elite status by Accretive Advisor, an online network for investors and advisors to connect. To achieve this Steve had to meet stringent criteria that confirmed his clients agree he provides the highest standard of service. For more information on the Accretive Elite advisor please visit Steve’s page on Accretive Advisor’s website.

    Steve has been active in various charitable and community organizations, is an avid sailor and started an active sailing association at his cottage, including a junior sailing program.

    Steve can be reached by email at shafner@newportprivatewealth.ca.

    How to protect your investments from a market downturn

    At our investment meeting this week, one of my colleagues shared the news that he had received a call late the night before from a prospective client confirming his decision to hire us to manage his portfolio. While that itself is not news we’re thankful to say, what was interesting was the voice mail message the investor left, saying, “The market seems a bit high so I’m moving my money over to you guys to put to work in your more diversified platform.”

    Although we may be biased, we think there is merit in what he says — and we applaud his foresight. Too many investors (even professional ones!) have a tendency to extrapolate current investment trends well into the future. That is, they buy in after markets have been performing well only to sell out of fear when they turn bearish. In other words, they buy high and sell low. Frequently-cited research by DALBAR shows that over the past decade, investors have cost themselves potentially 4% per year in returns by doing the wrong thing at the wrong time.  In this business, one must be vigilant about not letting emotion drive decision making.
    [read more >>]

    Risk management is a hard sell!

    Equity mutual funds are getting a late Christmas gift this month: they are finally able to drop return data from 2008  from the calculation of their five-year performance numbers. Why is that important?

    In 2008, global equity markets fell between 30-54% (as if we need reminding!). Given that mutual funds generally report one, three, five and ten year historical performance, dropping 2008 from their critical five-year returns will optically improve the numbers, no question. But what does it tell us about risk? Those better five-year numbers might attract some investors to a level of risk they don’t want — and perhaps don’t understand. Let’s look back for a moment.

    [read more >>]

    A nice problem to have …

    What do you do when you have a great investment manager putting up terrific numbers yet you see something you like better?

    That was the dilemma of our Investment Committee this past summer.

    One of our corporate bond managers, Canso Investment Counsel Ltd., has steadily and soundly trumped the index for the past several years. And in recent months, even as bonds have been under pressure, they’ve continued to deliver positive returns for client portfolios.

    However, as we look forward to the next three to five years, bonds are not our first choice for making money or protecting downside risk.

    For that reason, over the past year, our Investment Committee has been steadily increasing the allocation to global and US equities which we view as being more attractive for the next market cycle.

    Recently we took the additional step of selling a portion of the corporate bond holdings managed by Canso in both our Newport Fixed Income and Newport Yield Funds and moving the proceeds into cash – for a time.

    We did this in anticipation of a buying opportunity in global equities – with a particular eye on the U.S. With the current U.S. debt ceiling discussions looming over equity markets, Fed tapering, global tensions around Syria and the traditional “October effect” (the theory that markets decline in October), it seems to us a small correction is more likely than not and this would provide a good entry point at which to buy.

    I don’t imagine we’ll get the timing perfect, but as an Investment Committee it’s a nice problem to have as we move from one good investment to a potentially better one.

    We have also been deploying some of our cash proceeds into a sector we have favoured for over a year: U.S. real estate. We are very excited about the sources we have for U.S.-based investments in this space: Proven operators buying at distressed prices. Not a bad combination. Through them, we have built and are continuing to add to a broad and diversified portfolio of properties ranging from residential to commercial.

    Floating Rate Notes – a timely idea for fixed income investors

    Our first order of business is always to protect capital. (If you’re a client or a reader of this blog you likely know that’s been a constant theme in everything we do.)

    In anticipation of a potential rise in interest rates, one of the risks investors should be concerned about is a decline in bond values – what many investors typically think of as “the safe stuff.” If that sounds like a dichotomy it really isn’t. Generally speaking, when interest rates go up, the value of a bond declines. The longer the maturity of the bond the more it falls. (Read our earlier posts Convexity and bonds and Is it time for bond holders to rethink their strategy?)

    To protect our clients’ fixed income investments against rising interest rates — which are inevitable at some point — we’ve been shortening the duration of our bond holdings (now 3 years on average). In addition to that strategy there’s another idea we’ve implemented in recent weeks: Floating Rate Notes (FRNs). [read more >>]