Best Mixed Asset Fund Family Award at the 2007 Canadian Lipper Fund Awards.
Canadian Equity Pooled Fund Award at the 2006 Canadian Investment Awards.
Our Investing Approach
Equities
Acuity's value conscious growth style is a disciplined, conservative approach to identifying and owning reasonably valued growth companies that can be held for the mid to long term. Our investment strategy emphasizes companies with viable business models derived from sustainable competitive advantages. The scientific and technical expertise of our portfolio managers enables us to probe companies to determine whether a company truly possesses such advantages. We perform detailed, bottom-up fundamental research, including regular management interviews, company visits, and discussions with industry contacts, and supplemented with expertise provided by Acuity's Scientific Advisory Council. To assist in identifying attractively valued securities and determining appropriate purchase prices, we perform a rigorous financial analysis to identify companies with robust fundamentals.
Valuation of securities is based on our assessment of underlying financial quality, balance sheet strength, quality of earnings, profit margin trends, cash flow and earnings expectations, and price earnings ratios in relation to historic and expected growth.
Acuity buys a security when it meets or exceeds the qualitative and quantitative selection criteria identified above. Acuity divests under one of four circumstances: 1- we trim a position back to its portfolio weight and re-allocate to existing names. 2- the security becomes overvalued so we exit, take profits and introduce a new security to the portfolio, 3- we perceive an erosion in its basic fundamentals, 4- we substitute the security for another which we believe to offer superior investment potential.
Income Trusts
Acuity takes a time proven approach to investing in income trusts- unique hybrid instruments incorporating characteristics of both stocks and bonds and designed to distribute cash flow from an underlying business to investors in a tax-efficient manner. Acuity selects income trusts from one of the following four main categories depending on the investment objective of the Fund. The first type are bond-like securities, including REITs and power and pipeline trusts, characterized by stable distributions and lower than average yields. The second type are mature, modest growth business trusts with stable payouts and intermediate yields relative to other trusts. The third type are robust growth business trusts delivering increasing distributions coupled with low payout ratios. The final type are commodity and royalty trusts characterized by volatile payouts and high yields.
Fixed Income & Money Markets
Historically, Acuity has avoided over-exposing fixed income assets to market risk. Our strategy emphasizes quality while focusing on managing term and duration relative to the benchmark. Our fixed income style is best described as a managed duration/yield spread trading approach which is designed to produce consistent and predictable income while minimizing risk.
Bond portfolios are constructed around a core of high quality Government of Canada issues with short, mid and longer term maturities, averaging within ± 1 year around the index duration. The remaining holdings tend to be high quality investment grade provincial and corporate names with attractive yields and strong financial characteristics.
Balanced Management
Acuity offers three separate balanced pools for high net worth and institutional investors. The Acuity Pooled Balanced Fund is a traditional equity/bond program, typically with a 60/40 asset mix, for investors with moderate risk tolerance and a long-term investment horizon.
The Acuity Pooled Conservative Asset Allocation Fund has a fixed income bias (60/40) and is appropriate for investors with lower risk tolerance and/or a shorter investment horizon.
The Acuity Pooled High Income Fund employs a third asset class, income trusts, with a target weight of 33%. This exposure is supplemented by a targeted allocation of 33% to dividend paying equities and 33% to high quality bonds. The fund is designed to preserve capital and payout a steady stream of tax effective income on a flat monthly basis.
Both the balanced and high income products are also offered to retail investors through two mutual funds, the Acuity Balanced Fund and the Acuity High Income Fund.
Regardless of mandate type, the equity component of a balanced fund is managed to produce capital appreciation whereas fixed income holdings are managed to minimize risk within the asset class and to dampen overall portfolio volatility.