PWL Capital, Layton-Guay Portfolios, A Bet On Quality

PWL Capital Layton-guay model portfolios

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PWL Capital, Layton-Guay Portfolios, is exposed to between 35% to 75% stocks and 25% to 65% bonds. They can be built with 6 ETFs. The portfolios range from low-risk to high-risk.

For the past 10 years, the PWL Capital Layton-Guay Portfolios (US) 70/30 Aggressive has returned 7.36% with a standard deviation of 8.73%. The dividend yield is 2.10%. The 30-year return is 7.12%. Year to date PWL Capital Layton-Guay Portfolios (US) 70/30 Aggressive has returned -1.68%. Last year it returned 18.16%.

PWL Capital, Layton-Guay Portfolios, A Bet On Quality

How do you build one of the PWL Capital Layton-Guay investment portfolios? This is for the 50/50 portfolio.

  • 30.00% Total US Stock Market
  • 16.00% International Developed
  • 4.00% Emerging Market
  • 11.30% Global Bond Market
  • 33.70% Total Bond Market
  • 5.00% Global REITs

You can find many more portfolios further below in the post. There you will also find the right ETFs that you want to use to build the portfolio.

Right out of the gate, you’ll notice that the portfolio does not contain any Canadian stocks.

PWL Capital’s portfolios do contain allocations to Canadian stocks. They overweight Canadian stocks quite a bit. That’s a general trend that I have noticed with Canadian wealth managers and Canadian investing experts. They overweight quite massively Canadian stocks. This makes me conclude that Canadians have a considerable home country bias. But who can blame them? Canada is beautiful! And Canada has one of my favorite companies in the world, Brookfield Asset Management.

For the portfolios to be useful to the rest of the world and the US, in particular, I have made US counterpart portfolios from PWL Capital’s Canada heavy portfolios.

It means that I have swapped Canadian stock allocations to US stocks and I have swapped Candian bonds with US bonds,

In the performance section further below in this post, you can see the US stock portfolios and the Canadian stock portfolio side by side. This is an added benefit.

Who wins, Canadian or US stocks? *Queue drumroll*.

What are the returns of the PWL Capital Layton-Guay portfolios?

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
PWL Capital Layton-Guay Portfolios (CA) 30/70 Conservative70.4313.415.73%7.2410.03%
PWL Capital Layton-Guay Portfolios (CA) 40/60 Cautious7-1.0215.256.28%7.5510.03%
PWL Capital Layton-Guay Portfolios (CA) 50/50 Balanced7-2.4817.096.81%7.8220.03%
PWL Capital Layton-Guay Portfolios (CA) 60/40 Assertive7-3.9318.937.33%8.0620.03%
PWL Capital Layton-Guay Portfolios (CA) 70/30 Aggressive7-5.3920.777.83%8.2720.04%
PWL Capital Layton-Guay Portfolios (US) 30/70 Conservative6-0.0714.985.92%6.9210.05%
PWL Capital Layton-Guay Portfolios (US) 40/60 Cautious6-1.3116.836.62%7.3410.05%
PWL Capital Layton-Guay Portfolios (US) 50/50 Balanced6-2.5618.687.32%7.7220.05%
PWL Capital Layton-Guay Portfolios (US) 60/40 Assertive6-3.820.548.00%8.0720.05%
PWL Capital Layton-Guay Portfolios (US) 70/30 Aggressive6-5.0422.398.67%8.3830.05%

The US-focused portfolios do slightly better than the Canadian focused portfolios

Who is PWL Capital?

PWL Capital was founded in 1996. It is a wealth management and financial planning firm. In 2020 they have four offices in Canada shared among their six teams.

I have known about PWL Capital for quite some time as they tend to spread their knowledge around. They have a podcast, and many of their employees do solo educational things on the side that has to do with financial planning or investing. See the resource section below to catch some links.

In that regard, they share a commonality with Ritholz Wealth management. Many of the employees at Ritzholz also do things on the side, be it blog authors, book authors, etc.

I like that approach as you can’t fake real interest and passion, so I don’t see the side hustles as marketing even though it serves that purpose. Wouldn’t you work with someone who loves what they do rather than somebody who just considers working with you their job?

you can’t really fake real interest and passion

I also like their no-nonsense attitude. Right there on their front page, it states:

Integrated Financial Planning and Asset Management.
No fads. No guesswork. No drama.

I’m sold!

I only have one gripe with PWL Capital, that’s up next.

Well, and a minor one too.

Description of PWL Capital, Layton-Guay Portfolios

PWL Capital has a lot of investment portfolios. Each team at PWL Capital has its own set of investment portfolios. I’m not entirely sure of the organizational structure of PWL Capital, but this makes sense for PWL Capital.

From an outsider looking in, it makes no sense, however. Sure there are all sorts of reasons why you want to have 30+ different investment portfolios, but not really. I don’t see the advantage of letting all the different teams decide on their own portfolios allocations. It just adds a lot of overhead. But I’m missing something, of course, PWL Capital, is, after all, is a huge success story. That is not meant as a snide comment, but the fact that I do not see the whole picture.

A minor gripe would be the naming convention of PWL Capital portfolios. In other teams at PWL Capital, they call their portfolios some rather vacuous nonsensical names like assertive, cautious and conservative, to indicate risk levels of the portfolios. I like the Ritholz approach better. Barry Ritholz admitted that you almost always end up with dumb names for your portfolios, so at Ritholz, they just named the portfolios according to space and astrophysical themes like Saturn and Voyager. At least this removes the ambiguity.

What’s the difference between cautious and conservative in investing, anyway?

There is one thing that all of the PWL Capital Portfolios share, and that is simplicity.

They rarely use exotic asset classes. Instead, they are class light and favor broad asset classes. Although there are a few exceptions where the actual fund selection is quite puzzling. I’ll talk about that in a later post when I go through the portfolios of the other teams at PWL Capital.

The portfolios that are displayed below are from the Layton-Guay Portfolios.

Which funds and ETFs do PWL Capital Layton-Guay use?

The Layton Guay portfolios use a mix of ETF and fund providers to build their portfolios. They use funds and ETFs from the following providers:

All the providers are extraordinarily well-respected, and all use an index passive index strategy – with a few exceptions.

We see it as a positive sign that PWL Capital maintains a broad perspective of the selection of funds and ETF providers.

The PWL Capital Layton-Guay portfolios’ exposure to US stocks and International stocks is tilted towards value and small because they use the Vector from fund DFA. They allocate half of their US allocation to the DFA US Vector Equity Portfolio and more than half of their international exposure to the DFA International Vector Equity Portfolio.

The DFA Vector funds are Dimensional Fund Advisors smart-beta funds. The Vector funds select companies that are small, value, and highly profitable. In other words, the DFA Vectors funds try to capture four of the five risk premia that explain stock returns. Only the momentum factor is not captured. Michael Carhart proposed momentum.

The U.S. Vector Equity Portfolio purchases a broad and diverse group of securities of U.S. operating companies with a greater emphasis on small capitalization, value, and/or high profitability companies as compared to their representation in the U.S. Universe.

DFA Summary Prospectus for U.S. Vector Equity Portfolio

In our benchmarking, we have not used small or value funds to replicate the smart-beta allocation of the PWL Capital Layton-Guay portfolios. In the past 10-15 years, value has underperformed growth. Because of this, our benchmark probably overstates the performance you would have seen if you had held these portfolios. This also shows up in the performance of the Vector funds. Historically over long periods, value has outperformed growth.

There are five PWL Capital Layton-Guay portfolios. They vary in risk level, starting at 30% bonds 70% stocks up to 70% bonds and 30% stocks.

Their most aggressive portfolio only holds 70% stocks. Most other portfolios on portfolioeinstein.com would call a 70% stock portfolio conservative. If you are a young investor, then you don’t want to hold 30% bonds as 30% is a drag on your returns. With that said however, the best portfolio for you is the one you will stick with.

What is the Asset Allocation for PWL Capital, Layton-Guay Portfolios?

The following table shows the asset allocation for the US portfolios and the Candian portfolios.

NameTotal US MarketInternational DevelopedEmerging MarketsTotal US Bond MarketTotal Canadian StocksTotal Canadian BondsGlobal BondsGlobal REITs
PWL Capital Layton-Guay Portfolios (CA) 30/70 Conservative12.00%9.60%2.40%6.00%48.70%16.30%5.00%
PWL Capital Layton-Guay Portfolios (CA) 40/60 Cautious16.00%12.80%3.20%8.00%41.20%13.80%5.00%
PWL Capital Layton-Guay Portfolios (CA) 50/50 Balanced20.00%16.00%4.00%10.00%33.70%11.30%5.00%
PWL Capital Layton-Guay Portfolios (CA) 60/40 Assertive24.00%19.20%4.80%12.00%26.20%8.80%5.00%
PWL Capital Layton-Guay Portfolios (CA) 70/30 Aggressive28.00%22.40%5.60%14.00%18.70%6.30%5.00%
PWL Capital Layton-Guay Portfolios (US) 30/70 Conservative18.00%9.60%2.40%48.70%16.30%5.00%
PWL Capital Layton-Guay Portfolios (US) 40/60 Cautious24.00%12.80%3.20%41.20%13.80%5.00%
PWL Capital Layton-Guay Portfolios (US) 50/50 Balanced30.00%16.00%4.00%33.70%11.30%5.00%
PWL Capital Layton-Guay Portfolios (US) 60/40 Assertive36.00%19.20%4.80%26.20%8.80%5.00%
PWL Capital Layton-Guay Portfolios (US) 70/30 Aggressive42.00%22.40%5.60%18.70%6.30%5.00%

Notice there are two sets of portfolios. One is Canadian and the other is the US. PWL capital uses the Canadian variant. The US variant is our guess on how PWL Capital’s portfolios would look like if a client were based in the US.

Resources for PWL Capital, Layton-Guay Portfolios

PWL Capital’s YouTube channel act as a hub for all the videos the employees put out.

Here is an excellent interview that Benjamin Felix and Cameron Passmore did with Barry Ritholtz from Ritholz Wealth management. I could listen to Barry Ritzholz all day.

Benjamin Felix and Cameron Passmore from PWL Capital hosts the Rational Reminder podcast. It is excellent, and they have some interesting guests.

PWL Capital has a research section on their site where they try to make sense of the investing world. It’s not overly original research they do, and it is one area where they could shine if they put a little more effort into it.

Canada Couch Potato is made by Dan Bortolotti, portfolio manager at PWL Capital.

Canadian Portfolio Manager is a site made by Justin Bender of PWL Capital.

You can find the other portfolios from PWL Capital that we have covered:

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