Executive vice-president and portfolio manager

Years in the industry:
Years as a PM: 17
Industry accreditations: CFP, CFP
Typical clients: High-net-worth families and smaller institutions

To the surprise of almost no one, the Bank of Canada decided to hold its key rate at 0.5% in its latest update in March. For portfolio managers like Julie Brough, almost a decade of ultra-low rates has made things quite challenging when it comes to fixed-income exposure in her portfolios – but there are solutions.

“In general, we see three directions firms have gone in to deal with the low-interest-rate environment,” she says. “The first is increasing exposure to low-beta equity or equity alternatives such as infrastructure funds. The problem with that strategy is that the correlation to equity markets remains.”

The second strategy is using non-investment-grade debt, but this brings with it greater credit risk. “It is estimated that the default rate increases from 2% to approximately 8% when moving from a BBB to a BB,” Brough says. “When building a portfolio, that is a significant increase in expected failure rates – one default can offset all of the pick-up in yield.”

The third approach is simply accepting the low yields, or as Brough puts it, “controlling the risk and recognizing that you can’t change the environment that you are in.” Her team at Logan Wealth Management has adopted a two-pronged approach, seeking out bonds that offer returns while maintaining high credit quality, while also being willing to compromise with bonds that offer the best value in a challenging marketplace.

With 17 years as a portfolio manager to her name, Brough has strong opinions on some of the industry’s shortfalls – particularly when it comes to protecting investors. “I think the industry needs to be more aggressive about pushing poor advisors out,” she says. “I think this would benefit the industry’s reputation and, of course, benefit the clients.”

“I think the industry needs to be more aggressive about pushing poor advisors out. I think this would benefit both the industry’s reputation and, of course, benefit the clients”

Company Information

  • Logan Wealth Management
  • 1920 Yonge Street, Suite 200 Toronto, Ontario M4S 3E2

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