Finding the right balance between growth and income - A global challenge


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With investing nothing is static. Yesterday's theories and strategies may not always provide future prosperity. With central banks around the world providing enormous amounts of stimulus to help the economy (and a likely reversal for some major economies in 2022), asset managers face a new challenge – finding the right balance between capital growth and income and the need to pivot and think about new ways to generate returns.

Investors that traditionally relied heavily on bonds for income returns are now facing increased challenges as yields continue to be suppressed and are expected to stay lower for even longer. On the equity front, higher yielding stocks don’t often offer growth, and high growth stocks don’t often pay dividends. Therefore, investors could run the risk of eroding capital upside by chasing yields on low growth equities.

Against these challenges, how does one balance growth and income? The answer could be found in a new solution offered by TD Asset Management Inc. (“TDAM”).

Finding the right balance between yield and global growth opportunities

TDAM recently launched the TD Global Equity Income Pools as a tool for investors to find the right balance between yield and global growth opportunities. The TD Global Equity Income Balanced Pool and TD Global Equity Income Pool (the “Pools”) have been launched to generate capital growth and income for investors by investing primarily in securities with a focus on income-producing securities of issuers located anywhere in the world. More specifically, the Pools seek to provide an actively managed global income equity solution, overweight in exposure to dividend paying equities, to meet the needs of a wide range of investors, all by leveraging the expertise of the Asset Allocation and Fundamental Equity Teams at TDAM.

How we do it

Balancing the need for yield vs growth on a global scale is crucial and this need is amplified in today's inflationary environment. Moreover, "going global" isn’t a new theme, however, its importance is becoming more pronounced. A new approach to the search for yield on a global scale is vital looking forward. How do the new Pools approach this challenge in order to succeed today and beyond?

  • Two Layers of Active Management – Investors will benefit from both tactical adjustments made by the Portfolio Manager, as market opportunities arise, and the active investment approaches used by the underlying fund managers. The need for active management and the ability to pull on many different levers to achieve a given outcome is incredibly important in this low yielding and volatile market.
  • Unique Core-Satellite Approach - Combines a long-term focused strategic asset allocation with additional tactical levers using various exposures to take advantage of short-term market opportunities. This includes the ability to source income through various asset classes and countries including Real Estate and China, while tactically overweighting and underweighting U.S vs International.
  • Depth of Experience - Combines the expertise of the Asset Allocation and Fundamental Equity teams at TDAM. Our team-based approach leverages all capabilities to build a cohesive theme driving their views.
  • Increased focus on income - The strategy is comprised of dividend payers with a greater emphasis on dividend growers.

Our approach results in a team that can truly understand how to achieve a desired outcome with a deep understanding of the underlying tools and exposures. All of this rolls up to a total portfolio aimed at delivering an attractive return profile that helps provide both yield and growth to our clients while actively managing volatility.

The information contained herein has been provided by TD Asset Management Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.

Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable. Such expectations and projections may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS.

TD Asset Management Inc. is a wholly-owned subsidiary of The Toronto-Dominion Bank.

®The TD logo and other trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.

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