Our Philosophy

As an investment counseling firm catering primarily to high net worth individuals who have spent a lifetime achieving financial independence, we employ a broadly conservative investment philosophy with a long time horizon. Above all, we emphasize the preservation of capital by attempting to generate an overall portfolio return superior to the rate of inflation. After all, many of our clients emphasize to us that their capital is vital to their financial well-being. With that in mind, we attempt to ensure that their portfolios are managed in a responsible and consistent manner, with relatively low volatility and steady, patient growth. Our track record of some 23 years bears witness to the way in which we have been faithful to our philosophy.

Our investment process begins with a macroeconomic view: we are constantly forming and reforming our opinions on global, North American, and Canadian economic trends. As we carry out this process, we are continually monitoring and tweaking model portfolios and individual client portfolios accordingly, altering asset class mixes where appropriate, with the intention of being better positioned—whether to benefit from rising markets or to shield capital from sell-offs. This process is largely a team effort, and involves subjecting our researched opinions to critical group scrutiny; by doing so, we believe that only the most reasoned and fundamentally sound ideas survive.

Of course, our job does not end with an assessment of the macroeconomic environment and the alteration of portfolio asset mixes. Within each equity asset class, we exercise our skill as stock pickers; and this is our greatest strength: over 23 years, our equity portfolios have consistently outperformed their benchmarks on a total return basis. Our stock picking involves a long process comprised of generating ideas, researching them, discussing and criticizing them, selecting the best issues, purchasing them at the right prices and then appropriately distributing them within client portfolios. We also scrutinize each investment on an ongoing basis to ensure that its place in the portfolio remains justified. With three portfolio managers, we generate a significant amount of research in-house, but we also continually check our opinions against equity research from some of the country’s top sell-side and independent analysts.

While we feel especially at home with equities, Vestcap is not singularly focused. All asset classes have their place in a well-diversified, conservative portfolio, and we determine acceptable ranges for clients during initial and subsequent quarterly consultations. Our partnership with Artemis Investment Management, an alternative asset manager, is particularly significant here. With a great deal of experience “managing managers,” Artemis’ team members are masters at finding the best funds in other asset classes—whether they are hedge funds, mutual funds or exchange-traded funds—to complement our equity exposures, in accordance with our macroeconomic reading and client constraints. Their database consists of thousands of Canadian managers; they meet with scores of these managers on a regular basis, and only invest with those who have maintained a prudent and successful investing strategy over a long period.

A key part of our strategy—and one that is not always obvious—relates to expenses. After all, transaction costs, legal expenses, custodial and auditing costs and management fees, while an inevitable part of investment management, can also eat significantly into client returns. In this way, on a de facto basis they are negative returns. As a result, we take our fiduciary responsibility to our clients very seriously, seeking the best balance of superior execution and lowest cost. Our fee structure assists us in this: since we charge a single, competitive (and tax-deductible) flat fee and receive no commissions or kickbacks, we can seek the best service and price without a conflict of interest. Indeed, we do not benefit at all from client portfolio “churn.” Consequently, our clients sometimes save as much as 80% in commission charges when we are involved. We should also add that, if by some chance a client is dissatisfied with their current arrangement, our agreements are revocable so clients are free to change the arrangement at any time on only a month's notice.

Finally, our business is very much a people business. We meet with our clients not only during the initial consultation and setup of their accounts but on a regular and ongoing basis. At least quarterly, we like to review each client's account with them, and discuss upcoming strategies and market and economic trends for the quarter and year ahead. As part of our ongoing reporting efforts, we provide written portfolio analyses to our clients, as well as a quarterly newsletter with our thoughts on major investment trends. We believe that our client-centered approach has paid off: after all, the overwhelming majority of our clients have kept their accounts with us for many years.