Redefining Active Management

Yoonjai Shin, CFADirector, CI Investment Consulting

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• CI Investment Consulting team

• Redefining active management

• Market outlook

Agenda

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Yoonjai Shin, CFA

Director

Fund/manager analysisAsset allocationsCurrency strategy

Fund selectionProject management

Andrew AshworthAnalyst

Fund/manager analysisCash flow managementPerformance reporting

Lewis Harkes, CFA

Senior Analyst

Fund/manager analysisPerformance reporting

Alfred Lam, CFA

VP & Portfolio Manager

Investment strategy / Asset allocationsFund selection/ Currency strategy

Communications

Marchello HolditchSenior Analyst

Fund/manager analysis

CI Investment Consulting Team

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What do we manage?

$20 billion in assets under management

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Best Fund of Funds Award -2011

Best Fund of Funds Award -2012

Best Global Fixed Income Balanced Award -2012

Best Global Fixed Income Balanced Award -2013

Industry recognition

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• Bond return expectation is very low• Equity returns are more attractive but have high

volatility

Investors can either take more risks or demand from their portfolio manager to work harder

The new normal

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Redefining Active Management

Total return = Asset mix + Alpha + Market Beta + Currency – Tax – Fees

Optimize

Maximize Manage

Manage/

Reduce Minimize

Reduce

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Access to managers under one roof

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Expected Return %

Volatility

100i

40i6

0e

100e

PE expansion

.. . .

For illustration purposes only; there is no guarantee on results

. Gov’tBondsGIC

Solution for every investor

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Strong performance

2013* 20122011

PSS 40i60e 9.2 9.2 -2.9PS Balanced 8.3 8.1 -2.8Quotential Balanced Growth Portfolio 5.4 6.4 -4.5Fidelity Balanced Portfolio 5.0 8.1 -2.8Dynamic Edge Balanced Portfolio 5.0 6.0 -3.7AGF Elements Balanced Portfolio 4.6 6.8 -3.040% DEX, 60% TSX 1.9 5.2 -1.4

*May 31, 2013

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Why are we out-performing?

• Superior income allocation• Overweight US equity• Currency hedges did not cost us even though CAD has

depreciated in general• Strong performance from Cambridge and QV (PSS

only)

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Price-Earnings MultiplesBased on 12 Month Forward Operating Earnings

Bottom Up Earnings Based on CPMS (TSE) and IBES (S&P) Consensus

26 26

24 24

22 22

20 20

18 18

16 16

14 14

12 12

10 10

8 886 88 90 92 94 96 98 00 02 04 06 08 10 12 14

TSXS&P 500

Source: TD Securities

Overweight US

Outlook: US vs. Canada

13Source: CIBC

-6%

-4%

-2%

0%

2%

4%

6%

07

:4

08

:3

09

:2

10

:1

10

:4

11

:3

12

:2

13

:1

13

:4

14

:3

US

Canada

Forecast

Real GDP Growth, Y/ Y % Chg

GDP growth forecast

2013 2014

US 2.0% 3.2%

Canada 1.6% 2.4%

Outlook: US vs. Canada

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-6%

-4%

-2%

0%

2%

4%

6%

2004 2008 2012

Fed Funds Rate

Equivalent stimulus impact (including QE)

Source: Rudebusch (FRBSF Economic Letter, 2010), Haver Analytics, Federal Reserve, CIBC

Outlook: continued monetary easing

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Government of Canada benchmark bond yields - 10 year

GRAPH PERIOD: 28 May 2012 - 28 May 2013              

Source: Bank of Canada

Volatility in bond markets leading to tactical opportunities

Outlook: volatile bond markets

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USDCAD - PPP vs Actual

1.190

1.016

0.800

0.900

1.000

1.100

1.200

1.300

1.400

1.500

1.600

1.700

1986

1991

1996

2001

2006

2011

USDCAD - PPP

USDCAD - Actual

Canadian dollar is 17% overvalued based on Purchasing Power Parity

Source: Bloomberg

Outlook: Canadian dollar