We maintain a compliance manual of policies and procedures covering all aspects of portfolio management. Your account is reviewed at least quarterly, and this ensures that all investment decisions are in full compliance with your objectives.
We enforce a Fairness of Allocation of Investment Opportunities policy to ensure that each client has an equal opportunity to acquire or divest securities being traded.
While our portfolio managers invest their family wealth alongside clients, our clients come first. In step with the desire to practice the highest ethical standards, our portfolio managers cannot buy or sell securities in their own accounts until one day after client trades have been completed.
Best governance means being fully accountable to our clients and transparent about all fees and costs. We comply with the Code of Ethics and Standards of Professional Conduct of the CFA Institute. The code sets guidelines that promote integrity, competence and dignity within the investment community worldwide. The code can be found at http://www.cfainstitute.org/. Four of our staff currently hold the CFA designation.
Our reporting and disclosure conform to standards established by the Global Investment Performance Standards (GIPS®). These presentation standards provide consistency and comparable performance requirements for investment managers globally. The standards also set voluntary guidelines for the ethical presentation of investment performance. Further information can be found at www.gipsstandards.org
Clients receive a quarterly report of portfolio holdings and performance, including a comparison with time weighted benchmark returns. In addition, each quarterly report provides our commentary on a selection of companies bought or sold in the most recent period.
Clients receive a monthly statement from the custodian if there has been activity in your account, such as trading or receipt of dividend and interest income. If there is no account activity, the custodian issues a quarterly report.
Year-end tax information is provided on capital gains, interest and dividend income.
Investment Management Fees
Management fees are based on the average assets under management in each three-month billing period. The average assets are calculated from the portfolio values at each month end and divided by the number of months in the billing period. This number is multiplied by the appropriate annual fee percentages in the table below and then prorated for the quarter.
|Portfolio||Up to $2 million||Next $3 million||Next $5 million||Above $10 million|
We minimize trading costs by only buying stocks when we are convinced there is a reasonable prospect of realizing superior gains over several years and only selling stocks when we have either achieved our target price or conditions have changed.
We have never entered into “soft dollar” arrangements with our brokers. Soft dollars are a credit given to investment counsel ﬁrms as a percentage of commissions that can be used to pay certain expenses, such as a subscription to a data service. In our view, soft dollars increase transaction costs to the detriment of clients. In other words, clients pay for a beneﬁt given by the broker to the investment counsel ﬁrm. We have negotiated competitive trading commissions and execute transactions at institutional rates with our selected brokers.
Our custodian is NBCN Inc. We do not incur custodial fees, which can typically add up to 20 or more basis points (or 0.2 percent).
As active portfolio managers, we evaluate closely the governance practices of the companies in which we own shares to determine their potential impact on value creation.
We monitor whether the directors and management of a company are sensitive to shareholder interests and concerns in their governance policy. For example, we like companies in which management’s financial incentives are based on achieving pre-determined and measurable performance targets. We also like companies that require management to own shares during their tenure to ensure that the financial interests of senior executives genuinely align with those of other shareholders.
Evans Investment Counsel claims compliance with the Global Investment Performance Standards (GIPS ®). We consider this compliance creates a great marketing advantage and represents our commitment to ethical practices for our clients and prospects.
To receive a complete list and description of Evans Investment Counsel’s composites and/or a presentation that adheres to the GIPS standards, contact Daniel Glazerman at (416) 368-9310, or write Evans Investment Counsel Limited, 181 University Avenue, Suite 1202, Toronto, ON M5H 3M7.
When a Portfolio Manager has selected a certain stock or bond to purchase, the client portfolios are reviewed for suitability (i.e. asset allocation and portfolio restrictions). Those client portfolios identified to purchase the new investment are assigned appropriate amounts/weightings of the security, and the trades are sent for review and execution.
When a decision is made to sell a particular security across all portfolios, the portfolio managers enter the trade details and allocations into the trade management software. The software electronically sends the information to the traders for review and execution.
Since some client portfolios are held at different brokerages/custodians, the trade prices on the same day of execution may be different due to market changes during the time it takes to get the orders placed and executed at each brokerage. With this type of situation, we attempt to obtain the same (or similar) fill prices at the different brokerages/custodians. Not all brokerages allow bond and equity transactions to be bulked (i.e. multiple client orders are grouped together), which may lead to differing prices for accounts at the same brokerage. Where possible, same security transactions will be bulked and an average price used for all clients participating in the transaction.
When orders are only partially completed, we will request that the brokerage hold the partial position in their inventory account until the order is completed, at which time the trade is allocated to the client accounts. If the brokerage will not hold the position, allocation is usually done on a pro rata basis; however, individual allocations may occur depending on the size of the partially completed order and/or whether the brokerage is charging a minimum commission on the allocations. To minimize the number of small allocations, trades may be allocated on a random basis to the client accounts. A trade may not be allocated across all the accounts because the minimum commissions can be costly, especially if there are several small allocations made over many days or weeks.
When an Initial Public Offering (IPO) or secondary offering security is selected for investment (which is very rare), the portfolio managers determine the total amount they would like for their client portfolios. The amount desired is requested at the involved brokerages with which the Company does business. Due to the uncertainty of the actual IPO allocations to be given to us, the size of the allocation(s) and from which brokerage(s) will play a part in the portfolio managers’ decision for allocating proper weightings of the investment to clients.
The portfolio managers distribute pro rata to the client portfolios that have cash available and in which the investment would be suitable. If a very small IPO allotment is obtained, the allocations may only be given to a few clients. The portfolio managers will provide the traders with the client allocations for the offering security, which is given to the brokerage(s). A list is used to keep track of those who did and did not participate in each IPO. Those accounts that received an allocation from the most recent IPO, will be the last to receive allocations in the next IPO where the desired allocation is not attained.
The Company has negotiated a preferred commission schedule with NBCN Inc. due to the amount of assets held there and the volume of trading. Commissions for trades executed at brokerages for DAP accounts (i.e. trades executed at one brokerage that are settled at another institution/custodian) are generally institutional rates, and in certain circumstances (such as for very large or small orders), special rates can be negotiated at the time of execution. At full service brokerages, the commission rates generally follow the standard retail NBCN Inc. commission schedule, although the minimum commission charges are higher.
When bulk trades are filled and allocated at the same brokerage/custodian in which the accounts are held, the set commission schedule at the brokerage/custodian will apply to each account’s allocation. If the allocations are only partial fills, commissions may be negotiated.
For bulk trades completed at brokers other than where the accounts are held, the broker applies their commission to each DAP allocation. The allocations may be for an individual account or for numerous accounts at one brokerage, depending on the settlement policies at the broker/custodian where the accounts are held. When the trades settle in the client accounts, some brokers/custodians will apply an additional fee to each allocation.
The Company does not have control over the foreign exchange rates applied to non-Canadian dollar transactions in registered accounts (RRSP, RRIF, etc.). Currency conversions for non-registered accounts are executed in client accounts (generally between Canadian and U.S. dollars) to cover debits or provide funds for withdrawals and/or trades. Where possible, foreign exchange conversions will be grouped together to attain the best rate possible. Otherwise, the conversions are done on an individual basis, since some brokerages/custodians will only convert currencies on an individual account basis. This can result in clients receiving different exchange rates for conversions.
All employee and related trades will be separated in the Company’s trading software program, and in execution, to ensure that they do not conflict with client trades. Employee/personal trades which involve the same securities as new and/or pending client trades, will not be executed until at least one day after the client trades have been completed.
Staff are not permitted to participate in any IPOs or private placements in securities of publicly traded companies.