MD Financial Management CIO Bill Horton on BNN: Signals Favour Fixed Income Compared With Equities in the Short-Term

December 22, 2014

MD 10-year portfolio still holds 52% in equities

MD Financial Management Inc. (MD) has made a tactical, short-term decision to increase its portfolio weighting to fixed income assets compared to its strategic target. The Canadian Medical Association (CMA)-owned financial management organization has also reduced its position in international and U.S. equities relative to Canadian stocks in the near term.

Appearing on the Business News Network, MD Chief Investment Officer William R. Horton, Jr. explained the recent investment moves, or tactical asset allocation decision, which was announced on December 16, 2014.

“If we look at our 10-year time horizon portfolio, we are underweight equities by 4.5 percent, against what we would typically hold,” Mr. Horton said. “It’s the first time since 2009 that we have been underweight equities [versus fixed income],” he added. Overall, however, equities still account for 52% of MD’s10-year portfolio.

Mr. Horton also reiterated that MD’s tactical decisions are intended to add short-term value to client portfolios “at the margin”, or on an incremental basis. The quarterly decisions are based on in-depth economic research. This involves the use of quantitative models, or algorithms, that compare various economic signals for each asset class at a given point in time. The signals, or variables, include valuations, yield-curve dynamics and other macroeconomic factors, as well as momentum factors and market sentiment indicators.

Explaining the rationale behind MD’s tactical decision to decrease the allocation to international and U.S. equities, and increase the allocation to Canadian stocks, Mr. Horton said, “Valuation was not a direct factor in the decision. The decision was based mostly on momentum signals and the relative risk within each of the three asset classes,” he added.

MD will continue to closely monitor decisions and signals by central banks around the world, including the U.S. Federal Reserve, the European Central Bank and their counterparts in Japan and Russia. “Policy makers are still integrally involved in the outcomes for portfolios and the economy,” Mr. Horton said.

About MD Financial Management

MD Financial Management, with more than $38 billion in assets under administration, is a wholly owned subsidiary of the Canadian Medical Association. MD is dedicated to serving physicians and their families. MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies. For a detailed list of these companies, visit

Media Contacts:
Maria Grant
Communications Manager, MD Financial Management

Deborah Thompson
DT Communications

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