Alexandra Horwood, director of wealth management and portfolio manager with Toronto-based Alexandra Horwood & Partners, which operates under the banner of Richardson GMP Ltd., also of Toronto, has ascended rapidly in the investment business by focusing on affluent clients.

Horwood owes her success to her strategy of zeroing in on the financial needs of these clients, then fastidiously assembling a limited selection of products for each client to protect and grow their nest eggs.

“Clients who have accumulated wealth generally are more conservative [than others] and neither want nor need to take risks,” she says. “They want consistent returns and low volatility. The focus is on protecting and growing capital. And if clients are in retirement, they’re looking for stable cash flow, allowing them to maintain their lifestyle. We seek to participate in the upside of the market, but be well protected from downside risk.”

Horwood’s goal is not to beat market benchmarks in any given year, but to generate sufficient portfolio returns to meet her clients’ goals, whether they are to maintain a comfortable income, give money to philanthropic causes or help their children with education or in buying a home. She’s keenly aware of how damaging losses can be and how hard regaining lost ground can be.

Horwood takes what she describes as a “pension style” investment approach, going beyond ordinary stocks and bonds to offer access to a range of non-traditional investments, such as private debt and equity, hedge funds and mortgages. Portfolios are spread across four main areas: diversified fixed-income; market-neutral/absolute return; risk-adjusted equities; and alternative strategies.

Horwood steers away from investments that lock clients’ money up for years, preferring products that have at least monthly or quarterly liquidity features. This preference makes her leery of many real estate investments, which, she says, often are illiquid. As well, many clients already have much of their wealth tied up in expensive homes and other personal real estate holdings and, therefore, have sufficient real estate exposure already.

“We want products with a liquidity option so that in a worst-case scenario, we can get out,” Horwood says. “We’re loyal, but we’re also cutthroat. The only thing that matters is that we do a good job for clients. And although we don’t penalize any [money] managers for short-term underperformance, we won’t hesitate to make a change if we’ve lost confidence.”

The asset mix is adjusted for each client’s portfolio, depending on the client’s tolerance for volatility, goals and need for income or growth. Portfolios have exposure to a variety of geographical regions and industries, including health care, technology and infrastructure.

Positive performance

“We aim for positive performance every year, no matter what is going on in public stock and bond markets,” Horwood says. “We have deliberately sought out products with limited downside.”

For example, one of her income-producing investments is Sterling Mortgage Income Fund. That fund holds a diversified pool of mortgages and real estate loans and has achieved double-digit annual rates of return. She also likes Canso Corporate Value Fund, a corporate bond fund.

One of Horwood’s top recommendations in the equities category is Polar Long/Short Fund. As of May 31, that fund had generated an average annual return of 19.1% since its inception in September 1997, a track record of almost 20 years. The Polar fund has never had a negative calendar year, but the fund’s conservative risk-management approach means it has lagged market indices in some years, particularly during times of frothy markets. Notably, the fund managed a gain of 8.2% in 2008 amid the global financial crisis of 2008-09. The fund’s worst year was 2015, when it gained 1.3%; its best year was 2000, when it gained 106%.

La crème de la crème

Horwood has identified la crème de la crème of investment products by conducting her research with the relentless tenacity of a detective. She has narrowed her selection of independent money managers to 15. Horwood then uses their products in client portfolios in various proportions, depending on each client’s objectives.

Horwood looks for money managers who exhibit a long record of healthy returns, but she also wants to see tax efficiency, reasonable management fees, liquidity and the ability to survive tough markets in good shape. All of her money managers must have a record that goes back to at least 2008, so she can see how they weathered the global financial crisis.

Horwood’s list includes products sold by offering memorandum, such as hedge funds, as well as some prospectus-sold mutual funds that meet her exacting standards. These funds include funds sponsored by Edgepoint Wealth Management Inc., Sentry Investments Inc., RP Investment Advisors LP, Russell Investments Canada Ltd. (all of Toronto) and Mawer Investment Management Inc. of Calgary. The advantage of having some mutual funds in the mix is their lower investment minimums relative to some non-prospectus products, she says, and the mutual funds’ easy liquidity through daily sales and redemption features.

“I like to know everything that is going on with the investment managers and monitor them constantly,” Horwood says. “I don’t want to see style drift, and I want to be able to pick up the phone and call them personally for regular updates. I have lunch with them regularly and get to know all of these managers as people – to learn about their families, their hobbies, their goals and aspirations – and to know if they have integrity.”

In 2016, Horwood, then 30 years old, added the chartered investment manager designation to her qualifications, allowing her to manage custom-tailored, discretionary portfolios for clients. That designation permits her to make changes in clients’ holdings without time-consuming paperwork or having to confirm trades beforehand with clients, who sometimes may be inaccessible. About half of Horwood’s clients are mining executives who travel frequently to remote parts of the world and aren’t always reachable immediately.

Horwood’s clients may choose a fee-based or commission-based model, but most prefer a fee-based discretionary route, she says.

“Becoming a portfolio manager was the next step in building my business and achieving scale,” Horwood says. “[This aspect] reduces the administrative burden and allows [my team] to focus on exceptional client service. Our clients trust us to make necessary changes if circumstances warrant, and we are able to rebalance portfolios in a fraction of the time without having to get subscription agreements signed on every transaction.”

Horwood’s introduction to wealth management came early in life. Growing up in a family in which both her parents were investment advisors, money matters were built into conversations at the dinner table. After graduating with honours from the University of Waterloo, followed by studies at Australia’s Macquarie University, she gained valuable experience through co-op placements at Franklin Templeton Investments Corp. and PricewaterhouseCoopers LLP in Toronto, Research in Motion Ltd. (now BlackBerry Ltd.) in Waterloo, Ont., and Microsoft Canada Inc. in Mississauga, Ont.

In 2010, at the age of 23, Horwood joined the Horwood team at Richardson GMP, working as an assistant to her parents, John Horwood, a chartered accountant and financial advisor, and Rebecca Horwood, a pioneer who became the first woman investment advisor at Richardson Securities Ltd.’s (Richardson GMP’s predecessor firm) downtown Toronto branch.

A passion for the business

Propelled by a strong work ethic, a high level of competence and a passion for the wealth- management business, Alexandra Horwood rose quickly and the young protégé became the youngest wealth-management director and portfolio manager at Richardson GMP. In 2015, after accumulating a sizable client base, Horwood branched off with her own team.

In addition to the mining executives who compose half of Horwood’s client base, she also serves a variety of business owners, inheritors, senior executives and high net-worth families. Her team includes two associate financial advisors and one administrative assistant.

Horwood has 170 clients and $180 million in assets under management (AUM). Her ambitious goal is to have $1 billion in AUM, and she plans to expand her team judiciously in order to continue to offer exceptional service. Since launching Alexandra Horwood & Partners, she has consistently ranked in the top 10 of Richardson GMP’s 171 advisor teams as ranked by AUM growth.

Despite Horwood’s busy schedule, she still finds time for her family, exercise and a few enjoyable pastimes, such as reading and cooking. Horwood and her husband, Andrew Labbad (vice president, credit sales and trading, with TD Securities Inc.) had their first child, Mason, last November.

© 2017 Investment Executive. All rights reserved.