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Can a Mutual Fund Get Better With Age?

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The following content is sponsored by TD Asset Management

Can a Mutual Fund Get Better With Age?

Can a Mutual Fund Get Better With Age?

The average age of a mutual fund is just 8.6 years, which makes it quite a rare achievement for a fund to cross the 30 year mark.

However, after making it through two major recessions and countless global events, the TD Dividend Growth Fund has done just that.

In late 2017, the fund celebrated its 30th anniversary.

The Fund’s Purpose

Formed in 1987, the TD Dividend Growth Fund has the objective of providing high level of after-tax income for medium and long term focused investors and steady growth. It does this by investing in dividend stocks.

Key Reasons to Own:

  • Aims to combine strong performance with less volatility
  • Primarily invests in the stocks of high-quality companies
  • Focusing on Canadian dividends may gain favourable tax treatment
  • Dividends can provide income during retirement
  • Dividends accelerate through the power of compounding
  • If your dividends grow, it’s like getting a raise each year

For any investor that put $100,000 in the TD Dividend Growth Fund in 1987, they would have over $1.5 million today – beating the S&P/TSX Total Return by over $400,000.

This puts the fund in the top quartile of funds for performance over the last 30 years (as of Dec 31, 2017), as per Morningstar.

Why The Fund Could Last Another 30 Years

The fund’s portfolio managers understand the importance of collaboration, and work closely with the Fundamental Equity Research team to find and invest in dividend-growth companies. Further, they also work closely with the fixed income and asset allocation teams to create secured, well-diversified portfolios.

The portfolio managers also follow a disciplined investment process and conduct detailed fundamental research to identify high quality companies that feature consistent, growing dividends.

The outcome?

This approach offers growth potential plus a stream of dividends, which can help to provide both income and portfolio stability.

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Brace for Impact: Industries on the Verge of CBD Disruption

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Brace for Impact: Industries on the Verge of CBD Disruption

It seems as though cannabis is on everyone’s lips these days.

More specifically, the conversation centers around a major chemical compound found inside the plant—cannabidiol, or more widely known as CBD.

CBD’s far-reaching therapeutic benefits are propelling the global CBD market, which could hit $20 billion by 2024. However, industries like alcohol and pharmaceuticals are being directly threatened by this rapid rise.

Today’s infographic from CannaInsider explores how CBD is disrupting these industries, and the latter’s strategies to curb this effect.

Who will emerge unscathed?

CBD Market Spreading like Wildfire

A growing stream of robust research highlights CBD’s benefits in combating certain health conditions, such as:

  • Epilepsy
  • Anxiety
  • Insomnia
  • Chronic pain
  • Arthritis
    • Nearly every product segment, from pet health to beverages, is experiencing a CBD infusion to take advantage of these therapeutic effects.

      This surge in popularity presents significant opportunities to create an entirely new consumer base. Emerging consumers seek CBD products for various applications, such as self-care, socializing, and fitness.

      Going Head to Head with Big Players

      The alcohol, tobacco, and pharmaceutical industries are bracing for impact, as the new variety in CBD products and formats threaten their market share.

      Alcohol

      The percentage of alcohol consumers has dropped by 4.6% since 2000, with changing tastes at the center of this cultural shift.

      New research that tracked behavioural change from 2018 to 2019 found similar results. The percentage of alcohol consumers consuming cannabis has increased from 36% to 45%, while the percentage of cannabis consumers who consume alcohol has decreased from 72% to 65%.

      These behavioural shifts have influenced a significant number of alcohol industry titans to partner with cannabis companies. For example, Molson Coors is entering the cannabis space with Constellation Brands to launch CBD-infused beverages.

      Tobacco

      Similarly, declining smoking rates continue to negatively impact tobacco sales. As many tobacco giants pivot to reduced-risk-products (RRPs) such as vapes, cannabis is also catching their eye.

      Most notably, Altria invested $1.8 billion for a 45% stake in global cannabis company Cronos, potentially signalling the start of many partnerships between the two industries.

      Pharmaceuticals

      The pharma industry is particularly interested in CBD’s therapeutic properties. Medical cannabis sales for 2019 will reach $5.9 billion—poaching $4 billion from Big Pharma’s bottom line.

      This is triggering multinational companies to collaborate with cannabis companies at a furious pace. Partnerships—such as Novartis and Tilray—could unlock more international distribution of medical cannabis, and new pharmaceutical growth opportunities.

      Continuous CBD innovations will not only impact these industries—they could enhance human capabilities and unleash our full potential.

      Civilization 2.0

      A tsunami is unlocking new CBD sub-segments all over the world, with many offering solutions for mood and performance enhancement for both people and animals.

      • CBD for fitness: Incorporating CBD into a workout routine can boost performance, endurance, and recovery. Product types include pre-workout coffee, supplements, and post-workout smoothies.
      • CBD for pets: Proven benefits such as anti-inflammatory properties are driving sales of CBD treatments for pet health. By 2022, this market could be worth over $1 billion.
        • The Unknown Potential

          Applications that will allow a personalized cannabis experience are also on the horizon:

          • DNA-specific strains: Companies are testing people’s saliva to recommend specific strains that are tailored to their specific needs.
          • Odorless cannabis: More pure, less harsh odorless cannabis will soon be available, allowing consumers to smoke in stealth mode.
          • Grow your own: Cannabis consumers can cultivate their own plants at home, and even control the process from their smartphone.
            • As CBD consumption grows, many industries will need to decide to disrupt, or be disrupted.

              Several other cannabinoids have also been discovered, but they have yet to be researched in depth—which means the investment potential of CBD could be just the beginning.

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CRU Group: Where Macroeconomics Meet Commodities

For 50 years, the CRU Group has tracked the commodities that drive the modern world, bringing macroeconomic insights to investors for accurate pricing.

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CRU Group: 50 years of Commodity Research

The following content is sponsored by CRU Group.

CRU Group

CRU Group: Where Macroeconomics Meet Commodities

Commodities are crucial to our everyday lives. From the homes we live in, to the energy we use and the food we eat—none of these would be possible without commodities.

Today’s infographic from CRU Group celebrates 50 years of commodities research and charts the prices of the materials that make our world work.

The Importance of Commodities

CRU Group has 50 years of experience in providing business intelligence on the global metals, mining, and fertilizer industries. Regularly analyzing over 50 commodities, here are CRU’s highlights on four key commodities: aluminium, copper, steel, and nitrogen.

Similarly to stocks, commodities are available for sale on the open market, and prices are susceptible to changing economic conditions.

Factors Affecting Commodity Markets

CRU Group has identified five key factors that are currently affecting commodity markets.

  1. China Stimulus: China’s economy has recently slowed and policy makers are using stimulus to support sustainable economic growth. However, the delivery of stimulus is different from the past, moving away from infrastructure investment and towards tax cuts for businesses and households.
  2. Recession: Some analysts have been warning of a recession since 2018. When the economy is in decline, commodity sectors feel the downturn more acutely, because industrial production tends to slow down and there is less demand for materials.
  3. Automotive Tariffs: During 2019, there was a sharp contraction in automotive sales and production, due to the threat of U.S. auto tariffs. However, the main driver is stricter auto emissions standards introduced in Europe and Asia, creating uncertainty for consumers.
  4. Environment: Governments continue to adopt regulations in response to rising environmental concerns. Green policies will encourage investment in renewable energy infrastructure and electric vehicles, changing the type of minerals required for these technologies.
  5. Rise of Asia: By 2035, 3.5 billion people will be living in Asian cities, an increase of 47% from today. These growing cities will necessitate large-scale infrastructure projects, which consume vast amounts of resources.
  6. These five factors will drive the economic patterns of key commodities into the future.

    Commodities Spotlight

    CRU Group has been providing business intelligence on the global metals, mining and fertilizers industries for over 50 years. Regularly analyzing over 50 commodities, CRU highlights four key commodities here:

    Aluminium

    Aluminium is one of the most in-demand metals in the world by volume, second only to steel. Its lightweight, reflective, ductile and anti-corrosion properties make it the metal of choice for a range of applications. It takes four to five tonnes of bauxite ore to produce one tonne of aluminium.

    Copper

    Copper plays a huge role in the transition to clean energy. It is a good conductor of heat and electricity, and is also ductile and recyclable. These properties make it a crucial material in electric vehicles and renewable energy infrastructure, as well as electronic goods and construction.

    In the past 5,000 years, 550 million tonnes of copper has been produced. To keep up with demand, the world will need the same amount in the next 24 years.

    Steel

    Steel is lightweight, flexible, tensile, and recyclable. Its versatility and cost-saving benefits make it a preferred material within the construction sector. Demand for steel across various sectors signals growth and is a good indicator of the health of the general economy.

    China is responsible for 51% of the world’s steel production, and accounts for 49% of its demand.

    Nitrogen

    Nitrogen is an odorless, colorless gas that makes up 78% of the earth’s atmosphere by volume. Industrial processes capture ammonia from the air and convert it to other nitrogen compounds. Urea is the most common, and is primarily used as fertilizer. The global nitrogen market is worth $62.8 billion.

    Where Next?

    How CRU Navigates Complex Commodity Markets

    Commodity prices have many different drivers, from supply and demand dynamics to exchange rate movements. Volatility is a common feature to all these commodities and up-to-date pricing and information is critical.

    CRU commodity specialists disentangle these forces to interpret and forecast price movements. They apply a range of modelling techniques, as well as their experience and expert judgement.

    For 50 years, CRU Group has tracked the commodities that drive the modern world, bringing macroeconomic insights to investors for accurate pricing—and will continue to do so for the next 50 years.

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