Segregated Fund contracts are issued by The Empire Life Insurance Company (“Empire Life”). A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a Segregated Fund is invested at the risk of the contract owner and may increase or decrease in value. Please read the information folder, contract and fund facts before investing.
It's important to think of your life goals and dreams to better plan for your future. By working with an advisor to find the right asset mix and choosing an Empire Life segregated fund asset allocation solution that suits you best, you are one step closer to achieving your goals.
Asset allocation is an investment strategy whose aim is to balance risk and growth, by providing a framework for your investment portfolio that is set against your goals, risk tolerance and time horizon.
Several core elements go into constructing an asset allocation strategy. Having an asset mix that best aligns with your investor profile is the first element, but understanding diversification and how the portfolio is constructed can help you better determine which solution might offer the best potential for you to achieve your goals.
There are three main asset classes in most portfolios – cash (or an equivalent), fixed income (bonds), and equities (stocks). Each of these asset classes will perform differently at points in the market cycle. It is this difference in performance that can help reduce the overall level of volatility or day-to-day fluctuation that you will see in your portfolio. For example, bonds tend to perform better when stocks are falling and vice versa.
Understanding how these asset classes interact and how much risk you are willing to take on to achieve your goals can help you envision and plan for the investment options that feel right to you.
This illustration shows how the performance of the asset classes have compared with each other over the years, with the dark blue line showing how an asset allocation portfolio balanced between equities and fixed income has performed in comparison.
Source: Morningstar Research Inc. as at September 30, 2023. 1 60% FTSE Canada Universe Bond Index/40% S&P/TSX Composite TR Index. Indices are unmanaged and cannot be invested in directly. September 1, 1998 to September 30, 2023.
Diversification occurs from within the asset mix and is an active part of the asset allocation process by combining distinct asset types to reduce or limit overexposure to any single asset, region, sector or investment style. A good diversification strategy has the potential to provide higher long-term returns with lower risk than holding any individual investment.
Chasing winners or losers in any of the diversification categories may not provide the results you’re expecting. Having broad exposure to a variety of diversification elements can help smooth out the journey and potentially deliver the outcome you’re looking for.
If we looked at Canada as a share of the total value of all equities in the world, it represents a total of only 3%. Or put another way, 97% of the global investment opportunities lie outside Canada’s borders. Here’s a look at some of the top countries2 of the past decades, illustrating why it’s important to have broad exposure to several regions.
All equity markets generally align companies within 1 of the 11 Global Industry Classification Standard or GICS sectors.3
Having exposure to a wide variety of these sectors in a portfolio can help ensure you don’t get caught up in the cyclical nature of these businesses or their sectors, helping to reduce overall volatility and provide the opportunity for gains over the long-term. Here’s how the last 10-years shaped up for sectors in the U.S.
Based on the underlying equity sectors of the S&P 500. 3 Global Industry Classification Standard (GICS) and "GICS" are trademarks of Standard & Poors and MSCI.
Based on the underlying equity sectors of the S&P 500.
Drilling deeper into equities and fixed income exposes several sub-categories that can further enhance diversification within a portfolio.
By having exposure to companies of all sizes and a variety of fixed income categories, you can increase the potential to smooth out performance and achieve a good balance between risk and reward.
Fixed Income: U.S. High Yield Corporate based on Bloomberg US Corporate High Yield TR USD. U.S. Leveraged Loan based on Morningstar LSTA US LL Index TR USD. Government Bonds based on Bloomberg US Government TR USD. Equities: Small Cap Companies based on S&P/TSX Small Cap TR. Mid Cap Companies based on S&P/TSX Completion TR. Large Cap Companies based on S&P/TSX 60 TR.
Growth and value are common investment styles that evaluate stocks using similar fundamentals but through very different perspectives. They could be described as two sides of the same coin when it comes to adding upside potential to a portfolio. Growth and value have historically tended to outperform each other at different times of the market cycle. Adding style diversification to your portfolio has the potential to minimize downside risk while participating in the upside.
Source: Morningstar Research Inc. as at September 30, 2023. Indices are unmanaged and cannot be invested in directly.
Portfolio construction combines all elements of asset allocation and provides a framework that allows for more efficient management of the portfolio over the long term. Ultimately, that framework seeks to provide the best opportunity for you to meet your objectives while still aligning with your investor profile. Understanding what’s happening under the hood will help ensure you choose the investment that is right for you.
A strategic asset allocation takes a long-term market view to construct its asset mix, the portfolio stays fairly true to this mix over time. This strategic asset mix is designed to be in line with your investment objectives and risk tolerance.
A tactical asset allocation takes a more active approach and adjusts the asset mix of a given portfolio based on the prevailing market environment. The balance between equity and fixed income has the potential to be adjusted based on that market outlook.
Most portfolios have both a strategic or base asset allocation as well as the flexibility to tactically take advantage of shifts in the markets. Understanding how much flexibility or shift in asset mix you’re willing to accept can help determine which solution might best suit you.
Empire Life asset allocation segregated funds are diversified across several regions, sectors and investment types. They maintain a well-developed strategic allocation along with the tactical flexibility to take advantage of market shifts.
Each of the segregated funds below is constructed to align against one of six investor profiles. With solutions that range from very conservative to aggressive, there is a solution to fit most investor profiles. Select a segregated fund from the list below to learn more.
Investor Profile |
Target Strategic Allocation |
Empire Life Segregated Funds |
Level of Relative Tactical Asset Allocation |
|
|---|---|---|---|---|
| Fixed Income |
Equity | |||
Very ConservativeYou prefer a very stable investment, less focus on capital growth. |
80% | 20% | Emblem Diversified Income (80/20) | Low Tactical |
ConservativeYou prefer a stable investment, with less focus on growth. |
70% | 30% | Empire Life Income GIF* (60/40) | Low Tactical |
| Emblem Conservative (65/35) | Low Tactical | |||
| Emblem Global Conservative (70/30) | Low Tactical | |||
| Multi-Strategy Global Conservative (70/30) | Medium Tactical | |||
| Empire Life Canoe Conservative Portfolio GIF** (70/30) | Medium Tactical | |||
BalancedYou prefer a strategy that combines asset classes in approximately equal amounts in an attempt to balance risk and return. |
50% | 50% | Emblem Balanced* (50/50) | Low Tactical |
| Emblem Global Balanced (50/50) | Low Tactical | |||
| Multi-Strategy Global Balanced (50/50) | Medium Tactical | |||
| Multi-Strategy Global Growth Balanced (50/50) | High Tactical | |||
| Empire Life Balanced GIF (50/50) | Low Tactical | |||
| Empire Life Asset Allocation GIF* (50/50) | High Tactical | |||
| Empire Life Global Asset Allocation GIF (60/40) | High Tactical | |||
| Empire Life Canoe Balanced Portfolio GIF** (50/50) | Low Tactical | |||
Moderate GrowthYou are willing to accept periods of moderate market volatility in exchange for the potential of greater returns. |
30% | 70% | Emblem Moderate Growth (35/65) | Medium Tactical |
| Emblem Global Moderate Growth (30/70) | Medium Tactical | |||
| Multi-Strategy Global Moderate Growth (30/70) | Medium Tactical | |||
| Empire Life Monthly Income GIF (35/75) | Low Tactical | |||
| Empire Life Canoe Moderate Growth Portfolio GIF** (30/70) | Low Tactical | |||
GrowthYou emphasize long-term growth while seeking to maintain a moderate level of stability for your investment. |
20% | 80% | Emblem Growth (20/80) | Medium Tactical |
| Empire Life Dividend Balanced GIF* (20/80) | Low Tactical | |||
Aggressive GrowthYou emphasize long-term growth, seeking to achieve the highest return possible on your investment. |
0% | 100% | Emblem Aggressive Growth (0/100) | Low Tactical |
| Emblem Global Aggressive Growth (0/100) | Low Tactical | |||
| Multi-Strategy Canadian Equity (0/100) | Low Tactical | |||
| Multi-Strategy US Equity (0/100) | Low Tactical | |||
| Multi-Strategy Global Equity (0/100) | Low Tactical | |||
| Multi-Strategy Global Growth (0/100) | Low Tactical | |||
* This is the marketing name for the fund. The fund’s legal name excludes “Empire Life” and “GIF” and includes “Fund” at the end of its name.
** This is the marketing name for the fund. The fund’s legal name excludes “Empire Life” and “GIF” and includes “Canoe EL” at the start and “Protection Portfolio” at the end of its name.
Segregated funds available in the Empire Life GIF contract can give you the benefits of an asset allocation strategy combined with the unique benefits of segregated funds, such as:
*Final reset occurs on annuitant's 80th birthday
Speak to your advisor to learn how an asset allocation strategy can help you achieve your financial goals.
Empire Life Investments Inc. is the Portfolio Manager of certain Empire Life segregated funds. Empire Life Investments Inc. is a wholly-owned subsidiary of The Empire Life Insurance Company.
Segregated Fund contracts are issued by The Empire Life Insurance Company (“Empire Life”).
A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a segregated fund is invested at the risk of the contract owner and may increase or decrease in value. Past performance is no guarantee of future performance. All returns are calculated after taking expenses, management and administration fees into account.
