Perennial Asset Management
portfolio management

When we first meet, we introduce all our clients to the ‘wall of charts’, providing a look behind the curtain. We want you to understand some of the metrics and fundamentals on which we base our investment decisions because we know that makes for a better and more open relationship.

Our goal at Perennial is to build well-diversified investment portfolios that are designed to capitalize on opportunities when they appear, and to limit the downside in case we are early or wrong. Since we strive to deliver positive returns in all market environments, robust risk management is the key driver of all of our portfolio management decisions.

To this end, our investment process begins with a proprietary top-down analysis of macro-economic forces affecting the domestic and global economies and an assessment of their anticipated overall impact on interest rates and equity valuations. We use the findings from this process, in conjunction with numerous financial and valuation indicators, to give us a rational perspective on the potential asset mix, sector and risk to construct the portfolio for our investors.

Essentially, it’s all about paying attention to the historically-proven clues we see, taking advantage of investment opportunities wherever they exist and reducing risk by minimizing the exposure to over-priced areas of the market.

While our management style is disciplined, consistent and systematic, the strategy we employ is dynamic and flexible. Our many years of investment experience enable us to bring a rational perspective to managing portfolios in all market conditions.

Private Clients

Since we began managing the Perennial portfolios in 2006, we have gained the trust of our high-net-worth private clients, one client at a time. Our clients understand that we are different and recognize the value of our risk-adjusted, absolute-return approach to investing in both the equity and fixed income markets.

For these clients, we manage two portfolios, both of which have a North American focus:

  • Perennial Fixed Income Portfolio: Uses a non-traditional approach and primarily invests in bonds and money market instruments in North America. Our style emphasizes interest-rate anticipation, CAD/USD currency exposure as well as credit exposure to ensure investors are paid handsomely for the risk assumed.
  • Perennial Equity Portfolio: Invests in all asset classes to provide equity-like returns but with lower downside risk. This strategy allocates the portfolio to different investments (i.e., stocks, bonds, commodities, currencies, derivatives and/or cash). Perennial varies the allocation to each investment depending on the perceived opportunity and may also go short if this provides the best opportunity.
Perennial Fixed Income Portfolio

Portfolio objective: The Perennial Fixed Income Portfolio is designed to generate income and preserve capital. Consistent with our macro-economic view, Perennial employs a top-down investment process and actively manages the portfolio’s duration, currency and credit exposures. Perennial’s interest rate anticipation strategy positions the portfolio’s duration, both to protect the portfolio from rising rates and to earn healthy returns when rates fall. The portfolio typically invests in government bonds, high-quality corporate bonds, and short-term fixed income securities, which have generally been AA-rated or better.

Portfolio’s long-term view: We are entering new territory as interest rates have never been this low in our investment lifetimes. Over the past 30+ years, interest rates have been falling and bonds have earned excellent returns. Given today’s low rates, however, it will be a much more challenging environment than in the past. Perennial’s flexible mandate and approach means that we have both the latitude and the tools to protect the portfolio if we expect a rising interest rate environment. This flexibility will differentiate us from other fixed income managers.

Performance

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To learn more about the Perennial Fixed Income Portfolio,  Click here to contact Perennial

Perennial Equity Portfolio

Portfolio objective: The Perennial Equity Portfolio seeks to earn positive returns in all market environments, with lower downside risk than a typical long-only equity strategy. Perennial employs a top-down investment process and actively manages the Portfolio’s overall asset mix, depending on current market risks and opportunities. Perennial’s aim is to earn equity-like returns with lower risk than equities by positioning the portfolio in stocks, bonds, currencies, commodities, cash and their related derivatives.

Portfolio’s long-term view: The world’s developed economies have accumulated an unsustainable level of debt over three decades. While this accumulation phase was stimulative for economic growth, we are now in a phase where debt levels must be reduced as this debt hinders future economic growth.  The build-up of this debt took a long time and the solution to correct this predicament will not happen quickly. Indeed, the next decade will likely be very challenging.

Performance

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To learn more about the Perennial Equity Portfolio,  Click here to contact Perennial

Institutional

At Perennial, we recognize that institutional investors can benefit from our strategic “macro” thinking and active portfolio management approach. We are both flexible and opportunistic as we seek to capitalize on market movements, and to perform well across a range of market environments.

We assume risk when we believe we will be well compensated for it, and we avoid risk when we believe we will not be well remunerated. This risk-pricing framework is integral to our decision-making process. Hence, we seek to earn positive returns by managing downside risk and preserving capital.

Perennial manages two unique portfolios, both of which have a North American focus:

  • Perennial Fixed Income Portfolio: Uses a non-traditional approach and invests in bonds and money market instruments in North America, with emphasis on interest-rate anticipation, USD / CAD currency exposure and credit exposure only when paid handsomely for the risk.
  • Perennial Equity Portfolio: A North American “macro” strategy designed to provide equity-like returns with lower downside risk than equities. This strategy allocates the portfolio to different investments (i.e., to stocks, bonds, commodities, currencies, derivatives and/or cash), and by employing different investment strategies, such as shorting. Managing downside risk is as important as generating positive returns.
Perennial Fixed Income Portfolio

Portfolio objective: The Perennial Fixed Income Portfolio is designed to generate income and preserve capital. Consistent with our macro-economic view, Perennial employs a top-down investment process and actively manages the portfolio’s duration, currency and credit exposure. Perennial’s interest rate anticipation strategy  positions the portfolio’s duration, both to protect the portfolio from rising rates and to earn healthy returns when rates fall. The portfolio typically invests in government bonds, high-quality corporate bonds, and short-term fixed income securities, which are generally AA-rated or better.

Portfolio’s long-term view: We are entering new territory as interest rates have never been this low in our investment lifetimes. Over the past 30+ years, interest rates have been falling and bonds have earned excellent returns. Given today’s low rates, however, it will be a much more challenging environment than in the past. Perennial’s flexible mandate and approach means that we have both the latitude and the tools to protect the portfolio if we expect a rising interest rate environment. This flexibility will differentiate us from other fixed income managers.

Role of Perennial Fixed Income Portfolio as part of an institution’s fixed income strategy: The Perennial Fixed Income Portfolio can be additive to an institution’s existing fixed income strategy. As a tactical bond manager with an absolute return mandate focused on North America, we believe Perennial’s strategy will excel even in a volatile interest rate environment.

Learn more

To learn more about the Perennial Fixed Income Portfolio, Click here to contact Perennial

Perennial Equity Portfolio

Portfolio objective: The Perennial Equity Portfolio seeks to earn positive returns in all market environments, with lower downside risk than a typical long-only equity strategy. Perennial employs a top-down investment process and actively manages the Portfolio’s overall asset mix, depending on current market risks and opportunities. Perennial’s aim is to earn equity-like returns with lower risk than equities by positioning the portfolio in stocks, bonds, currencies, commodities, cash and their related derivatives.

Portfolio’s long-term view: The world’s developed economies have accumulated an unsustainable level of debt over nearly three decades. While this accumulation phase was stimulative for economic growth, we are now in a phase where debt levels must be reduced as this debt hinders future economic growth. The build-up of this debt took a long time and the solution to correct this predicament will not happen quickly. Indeed, the next decade will likely be very challenging.

Role of Perennial Equity Portfolio as part of an institution’s total portfolio: The Perennial Equity Portfolio can be additive to an institution’s total portfolio either as:

  • A pure equity substitute – as a diversifier: The Perennial Equity Portfolio has a very low correlation to the overall equity markets and is additive to a portfolio.
  • An equity / fixed income substitute – as a tactical allocation strategy: Alternatively, institutional investors could use the Perennial Equity Portfolio as both an equity and a fixed income substitute, to help them overweight or underweight their overall equity / bond asset mix (i.e., as a tactical asset allocation strategy).
  • Part of a hedge fund / opportunistic bucket – as a risk diversifier / return enhancer: The Perennial Equity Portfolio has very low correlation to both the equity markets and to the majority of hedge fund strategies, as Perennial’s return stream is unique. Hence, an allocation to Perennial can be additive to a hedge fund / opportunistic portfolio.
Learn more

To learn more about the Perennial Equity Portfolio, Click here to contact Perennial

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