Diversify Your Portfolio—With New CDSPI Funds

March 28, 2012

As of April 1, investors in the CDSPI funds have even more investment choices, with the introduction of the Short-Term Advantage Fund Corporate Class (CI), Canadian Equity Fund Corporate Class (CI) and Global Real Estate Fund (Invesco). The new funds—introduced based on feedback from dentists—allow opportunities for broader diversification and tax efficiency.

New Corporate Class Funds Offer Tax Efficiency

For example, two of the new funds are corporate class funds, which are suitable for tax-efficient investing in non-registered personal or corporate accounts.

The CDSPI Short-Term Advantage Fund Corporate Class (CI) aims to achieve tax-efficient returns that are similar to those of money market instruments, while preserving capital. It invests primarily in Canadian stocks, but also in derivatives to effectively change its risks and returns from those of an equity portfolio to be similar to one that invests in money market instruments. It is an excellent short-term investment choice for those who want low risk.

The CDSPI Canadian Equity Fund Corporate Class (CI) seeks capital appreciation over the long term, coupled with dividend incomes. It invests primarily in common shares and convertible equities of Canadian companies and preferred shares that pay regular income. The fund’s investments are diversified across industry sectors.

The new funds complement the three existing CDSPI corporate class funds: the CDSPI Canadian Bond Fund Corporate Class (CI); the CDSPI Corporate Bond Fund Corporate Class (CI); and the CDSPI Income and Growth Fund Corporate Class (CI).

Including corporate class funds in your non-registered portfolio can provide the tax efficiency of capital gains, irrespective of how the income is earned. That’s because corporate class funds are actual corporations, compared to traditional mutual funds which are trusts. This set-up gives corporate class funds the ability, in most cases, to convert less tax-advantageous interest and dividend income into unrealized capital gains.

Along with lowering your taxation rate, corporate class funds can help you defer taxes into the future, similar to a registered account. Switching money between one corporate class fund and another corporate class fund also won’t trigger a capital gain, as long as the switch is within the same fund family or company.

New Real Estate Fund Can Help Offset Risk

The third new fund invests in real estate equities, a completely new asset class for the CDSPI funds.

The CDSPI Global Real Estate Fund (Invesco) has the objective to generate a total return through capital growth and income by investing in real estate securities (including Real Estate Income Trusts) from around the world. The focus is on larger, quality companies that have exposure to the major sectors of the market. It aims to minimize risk through a well-diversified portfolio and provide attractive risk-adjusted returns. This investment is suitable for investors who seek long-term growth and are comfortable with above-average risk.

Historically, returns of global real estate securities have had low correlation to the returns of stocks and bonds. Therefore, adding a real estate fund to an investment portfolio that includes fixed income and equity assets can enhance its diversification. In addition, by holding assets outside of Canada, the fund can offer protection from swings in the Canadian economy.

CDSPI Fund Advantages

The CDSPI funds offer a wide range of fund types to allow diversification, including guaranteed, money market, income, equity and income, Canadian equity, international equity, corporate class and managed risk portfolios (wrap funds) and are managed by a number of leading fund managers offering different management styles to match your objectives. The funds have extremely low management fees of 0.65% to 1.77% and have no sales charges or administrative account fees* to drag down investment returns.

Canadian Dentists' Investment Program Plans for Your Goals

CDSPI funds can be used in a variety of plans within the Canadian Dentists' Investment Program to help you meet your different investment goals:

Saving for Retirement

RRSP (Registered Retirement Savings Plan)

IPP (Individual Pension Plan)

Income in Retirement

RRIF (Registered Retirement Income Fund)

Saving for Short- and Long-Term Goals

Investment Account (non-registered)

TFSA (Tax-Free Savings Account)

Saving for Children's Education

RESP (Registered Education Savings Plan)

Saving for Business

Investment Account for Business

Their low management fees can help the performance of the CDSPI funds compared to others in the general marketplace. Although past performance is not an indicator of future returns, as at December 31, 2011, 88% of CDSPI funds were in the top two quartiles for one-year performance, 90% were in the top two quartiles for three-year performance and 85% were in the top two quartiles for five-year performance.

What is also attractive is the no-cost professional assistance available from an advisor at CDSPI Advisory Services Inc. who can help you set up investment plans and advise you about making investment choices. In fact, if you wish, your advisor can prepare a financial plan for you (at no-cost) to help you determine how to achieve all your investment goals.

To learn more about CDSPI funds and the investment plans, or for no-cost investment planning advice, contact a licensed investment planning advisor at CDSPI Advisory Services Inc. Dial 1-877-293-9455, extension 5023. Restrictions may apply to advisory services in certain jurisdictions.

* Surcharges may be levied for short-term trading.


Mr. Ron Haik, MBA, CFP, FMA, FCSI, CSWP, is the vice-president of Investment Services at CDSPI Advisory Services Inc. Email: investment@cdspiadvice.com