When they changed from Chorus to Chorus II at the end of the year, the number of Desjardins' investment portfolios for wealthy clients decreased from 18 to 6. "This major change is because we wanted to simplify our offering," says Éric Landry, senior director of specialized savings products at Desjardins.
The six mutual fund portfolios can hold trusts in the RRSP version and corporate funds in non-registered accounts. The corporate fund category allows assets to be transferred between different portfolios without triggering taxes. "We are adding a tax benefit to our lineup because we had no corporate funds previously," said Mr. Landry.
However, these portfolios are not aimed at the average investor: the minimum deposit is $100,000. The advantage, says Mr. Landry, is that the investor can benefit from a sliding fee scale depending on the value of the portfolio. The portfolio is designed to generate an income stream, and the investor also has a choice between two predetermined distribution rates. "The balanced portfolio, for example, will offer a rate of 5% or 6%.The growth portfolio will go up to 7%.The customer can also have a personalized rate," explains Mr. Landry.
Chorus II is also set apart by its dynamic asset management. The manager has a target benchmark allocation among major asset classes but can improvise according to market conditions." The manager is free to deviate from the target in order to protect the asset or take advantage of an opportunity in the market. If fixed income appears to be relatively expensive compared to equities, it can be under-weighted. This is not, however, automatic rebalancing," says Mr. Landry.
Chorus II also incorporates exchange traded funds (ETFs) to access more specialized asset classes such as resources while minimizing management costs. "The ETF offers more flexibility to the manager.They can account for 5% to 15% of a portfolio's holdings."