Institutional Asset Management
Overview
Toron Investment Management was founded as a risk management advisor in 1988, managing and developing customized currency and interest rate hedging strategies for mid-sized corporate clients. Today our business focus is building and managing investment portfolios for families, foundations and other institutions that reflect our risk management culture and heritage. Our growth and success is a direct result of the prudence and due diligence we exercise when allocating each and every client's capital. Our portfolio managers use their decades of market experience to deliver superior investment performance.
Toron offers global equity, global and Canadian equity and fixed income portfolios. Each institutional client's portfolio is built to reflect its return objectives, risk profile and taxable status. We recognize that each institutional investor has distinct values and business objectives, which necessitates a highly personalized service and meaningful, ongoing dialogue. Our objective is to build long-term relationships with our institutional clients through regular direct contact with our investment professionals and client service team.
Investment Philosophy
Toron’s primary and over-arching goal is growing our client’s investment capital in a low risk manner. We believe that this goal is best achieved in a two-pronged approach – disciplined security selection overlaid with a strong culture of risk management.
Toron believes that the foundation of superior long-term investment performance is grounded in thoughtful, disciplined security-specific fundamental research. This is why we conduct our own independent research not simply relying on research reports produced by investment dealers whose opinions may be swayed by factors other than a stock’s pure investment merit. Our research process seeks to identify companies with outstanding fundamentals, financial characteristics, and cash flow tailwinds that the market has priced incorrectly due to temporary performance issues. Purchasing a security at a discount to its intrinsic value provides a margin of safety that protects returns on the downside while providing the opportunity for strong long-term returns.
Investment decisions are based on a thorough assessment of a company, the industry in which it operates and its management team. When considering an investment for potential inclusion in client portfolios Toron’s Investment Committee looks for companies that demonstrate a sustainable competitive advantage and industry leadership. Other characteristics that we look for include:
- Best in Class Financials: A proven ability to generate strong free cash flow with strong balance sheets. These companies have the financial flexibility to re-invest in their businesses, make opportunistic business acquisitions and pay dividends throughout a market cycle.
- Proven Management: Management teams must have a demonstrated track record of performance through various industry cycles and achievement against stated objectives. We also look for management teams whose interests are strongly aligned with those of shareholders and who have demonstrated their ability to allocate capital effectively.
- Attractive Valuation: Potential investments must trade at a discount to our estimation of their intrinsic value. We undertake several valuation techniques for each investment; however, downside estimation (or margin of safety) features prominently in our calculations.
- Transparent & Probable Growth Opportunities: Securities trading at a discount to intrinsic value provides us with a margin of safety; however, a potential investment must also have a set of identifiable growth opportunities that will allow us, as shareholders, to realize the inherent value in the investment.
- Shareholder Friendly Policies: We believe that companies that exhibit shareholder friendly processes, customs, and policies are rewarded through improved access to capital and ultimately a higher share price.
Risk Management & Portfolio Construction
At Toron, we believe that risk management is a key component to producing superior, long-term, risk-adjusted returns. Our heritage as a risk management advisor is evident in not only our security selection process, but also our portfolio construction process. The highest return is not our primary goal; it is the highest return with the least commensurate amount of risk. By focusing on preventing potential losses in the portfolio, we can “let the winners take care of themselves.” We measure risk in a variety of different ways, but there are a few key approaches to how we manage risk in our client portfolios:
- Geographic diversification
- Industrial diversification
- Currency diversification
- Low business & statistical correlation between investments
- Avoiding the temptation of large sector bets
Benchmark Agnostic
Our portfolios are generally relatively concentrated in terms of number of holdings (typically between 30 and 40 equity investments). Simply put, we do not believe that benchmark indexes are investment portfolios. As such, we do not invest in a company simply because it is a large index constituent; each investment must stand alone on its own investment merits and must be a judicious use of our clients’ capital. For this reason, Toron’s portfolios are not simply a reweighting of benchmark components. We view our portfolios as a coherent collection of best-in-class businesses.↑ top
Client Service & Commitment
Toron has been operating for more than twenty-one years. As partners, we are seasoned and experienced financial professionals whose decades of experience bring skills, knowledge and stability to the firm; which in turn, provides peace of mind and confidence to our clients, many of whom have been with us since the beginning. We believe that peace of mind can only be accomplished through regular and timely communication. We pride ourselves on our understanding of the unique requirements of each of our clients and being able to deliver a highly personalized service offering.
Our user-friendly website is simple, straightforward, and easily navigated. Clients can access password-protected accounts and view complete portfolio holdings and valuations on a daily basis, or as required.
In addition, we provide our institutional clients with monthly portfolio valuations, transactions and performance reports. We encourage informal impromptu meetings, but commit to formal quarterly meetings to discuss investment policy, strategy, performance, and capital market conditions.↑ top
