investing for the new retirement realities · portfolio td retirement balanced portfolio fund type...

TD Asset Management l For Advisor Use Only

Investing for the New Retirement Realities Dino Bourdos, CFA, Managing Director TD Asset Management Inc.

Geoff Wilson, CFA, Managing Director TD Asset Management Inc.

What we’re talking about…

n  Looking at Retirement in a New Light

n  TD Retirement Portfolios

n  Product Positioning

2 TD Asset Management l For Advisor Use Only


Looking at Retirement in a New Light

What are retirees looking for…

n  Cashflow in retirement

n  Potential for modest growth

n  Protection of capital

Will traditional retirement solutions deliver?


0%

5%

10%

15%

20%

25%

30%

1955

19

57

1959

19

61

1963

19

65

1967

19

69

1971

19

73

1975

19

77

1979

19

81

1983

19

85

1987

19

89

1991

19

93

1995

19

97

1999

20

01

2003

20

05

2007

20

09

2011

20

13

2015

20

17

2019

20

21

2023

20

25

2027

20

29

2031

20

33

2035

Popu

lation

age

d 65

year

s and

olde

r (%

)

Demographics source: Statistics Canada, 2005, Population Projections for Canada, Provinces and Territories, 2005-2031, Statistics Canada Catalogue number 91-520-XIE.

Demographic Trends

Greater need for retirement income


Yields source: Statistics Canada, as at March 31, 2013. Yields are an average of the 5 and 10-year Government of Canada bond yields.

The Role of Fixed Income has Changed

More retirees and less income

n  Interest rates are at generation lows and may rise

n  Fixed Income returns may be lower than in the past

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Yield#


$293,028 $200,000 $143,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Kim Dan

Assumption: Kim and Dan have an annual withdrawal of $15,000 per year. *Kim’s returns reflect the S&P/TSX annual return between 1993 and 2002. **Dan’s returns reflect the S&P/TSX annual return between 2001 and 2010.

Avoiding negative returns early in retirement is critical

Sequence of returns: Does it matter?

For illustrative purposes only.

Dan’s average annual return** = 9% 2001-2010

Kim’s average annual return* = 10% 1993 - 2002


Accumulation Pre-Retirement Retirement

Objective •  Saving •  Long term growth

•  Limit volatility •  Capital

preservation

•  Saving •  Consolidating

assets

•  Regular income •  Inflation protection •  Capital preservation

•  Stability of legacy •  Asset longevity

Investment Vehicles •  Mutual Funds •  Fund-of-Funds

•  No target vehicle •  Fixed income •  GICs •  Insurance products (Annuities/GMWBs)

TD Retirement Portfolios Opportunity

Product allocation life map: Transitioning into the Retirement Portfolios

For illustrative purposes only.

Opportunity

Accumulation Decumulation

Age Retirement



TD Retirement Portfolios

Which Retirement Portfolio may be right for your client

n Clients needing cash flow from their investments to cover essential expenses

n Classified as low risk, the Portfolio can be an alternative to fixed income to complement a client’s broader investment portfolio


TD Retirement Conservative Portfolio

TD Retirement Balanced Portfolio

n  For clients who have the flexibility to consider discretionary spending/legacy

n  Classified as low to medium risk, the Portfolio can be an alternative to balanced funds to complement a client’s broader investment portfolio

TD Retirement Portfolios - Composition

Integrated solution: Income,

Growth and Risk Reduction


Composition

Fixed Income n  Income generation

n  Global diversification

n  Core, credit focused portfolio with tactical allocations

Strives to provide yield, stability and diversification


Composition

Low Volatility Equities n  Growth potential helps mitigate

longevity risk

n  Equity exposure within a prudent risk framework

n  Strategy leverages TD Asset Management’s (TDAM’s) institutional expertise

Aims to provide growth in a risk controlled manner


Composition

TD Risk Reduction Pool n  A core component of

TD Retirement Portfolios

n  Capital preservation focus; uses options to manage portfolio volatility

n  Proprietary process adaptable to market conditions

Seeks to provide capital preservation, modest growth and diversification


TD Retirement Conservative Portfolio TD Retirement Balanced Portfolio

Low Volatility Equities 0% - 25% 10% - 40%

Flexible Fixed Income Strategy 15% - 45% 15% - 45%

TD Risk Reduction Pool 40% - 70% 25% - 55%

Cash 0% - 20% 0% - 20%

Cash5%

Low Volatility Equities

10%

TD Risk Reduction

Pool55%

FlexibleFixed

Income30%

Cash5%

Low Volatility Equities

25%TD Risk Reduction

Pool40%

Flexible Fixed

Income30%

TD Retirement Portfolios: Allocations

Provides flexibility to exploit benefits of each component Source: TD Asset Management. As at September 30, 2013.


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Sep$13' Oct$13' Nov$13' Dec$13' Jan$14' Feb$14' Mar$14' Apr$14'

Weight'

Cash' TD'Risk'Red'Pool' TD'Cdn'Core'Plus'Bond'EquiFes' Cash'Stretegic'Weight' TD'Risk'Red'Strategic'Weight'TD'Cdn'Core'Plus'Strategic'Weight' EquiFes'Strategic'Weight'

1

Asset Allocation in Action: TD Retirement Balanced Portfolio

Composition of the TD Retirement Balanced Portfolio (September 2013 to April 2014)

Source: TD Asset Management. As at April 30, 2014.


Responding to the New Realities

n  TD Retirement Portfolios are flexible and cost effective solutions designed specifically for the unique needs of retirees and pre-retirees.

n Using some of TDAM’s most innovative strategies, the Portfolios seek to deliver a mix of regular cash flow, some growth and most importantly, capital preservation.

n  TDAM remains focused on providing solutions to meet evolving investor needs.

Our goal is to deliver a positive client experience


TD Retirement Conservative Portfolio

TD Retirement Balanced Portfolio

Fund Type Conservative Balanced Balanced

Series Investor, Advisor, H, T, and S Investor, Advisor, H, T, and S

Portfolio Adviser TDAM TDAM

Risk Low Low to Medium

Management Fee 1.50% Mgt fee. (F series: 0.75%) 11.75% Mgt fee (F series: 0.85%)

Administration Fee 0.08% 0.08%

Trailer Fee 0.75% 1.00%

T-Series Payout 5% 5%

TD Retirement Portfolios: Overview

Solutions that have the potential to provide modest capital appreciation while seeking to protect against adverse market events

1Effective Sept 10, 2013, TDAM will waive a portion of the management fee to ensure the annualized daily rate will be 1.75% for the Investor, Advisor, H and T series units of the Portfolio. The maximum management fee as stated in the prospectus remains unchanged at 1.85%. This waiver may be suspended or terminated by TDAM at any time without notice to unitholders.


Disclaimer The information contained in this presentation has been provided by TD Asset Management Inc. (“TDAM”) and is for information purposes only. The information has been drawn from sources believed to be reliable. Where such statements are based in whole or in part on information provided by third parties, they are not guaranteed to be accurate or complete. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any fund. The information does not provide financial, legal, tax or investment advice. Particular investment or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. TDAM, The Toronto-Dominion Bank (“TD Bank”) and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus, which contains detailed investment information, before investing. Simulated Overlay Strategy returns are back-tested results based on a disciplined investment thesis that was rigorously implemented using data from Bloomberg beginning in September 2008. All historical performance was calculated using actual end of day securities prices and implied volatility at the time, incorporating conservative transactions costs, and did not involve any forward looking bias or data mining. The Black Scholes options pricing model was used to derive the price of the options that were used in the performance calculations. The analysis assumed no cash inflows or outflows during the period. Rebalancing occurred regularly to keep the portfolio fully invested. The synthetic performance information is shown for illustration purposes only and is not based on actual results, which may vary. Synthetic performance information is hypothetical and subject to inherent risks and limitations, and is shown gross of fees and are calculated in US dollars. No representations are being made that any proposal will achieve returns similar to the hypothetical information shown. Investors should not take this example or the data included as an indication, assurance, estimate or forecast of future or actual results. The actual performance returns may differ materially from the information shown for reasons including, but not limited to investment restrictions and guidelines, fees, timing of trade execution, investment/reinvestment of cash flows, treatment of dividends, interest fees charged including performance fees, portfolio rebalancing, borrowing fees on shorts, swap fees, the extent of leverage used, any use of derivatives, and fluctuations in the market. The index returns are shown for comparative purposes only. Indexes are unmanaged and their returns do not include any sales charges or fees as such costs would lower performance. It is not possible to invest directly in an index. Standard deviation is a statistical measure of the range of a fund’s performance. When a fund has a high standard deviation, its range of performance has been very wide, indicating that there is a greater potential for volatility than those with low standard deviations. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. TD Mutual Funds are managed by TDAM, a wholly owned subsidiary of The Toronto-Dominion Bank (“TD Bank”) and are available through authorized dealers. Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable and may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS. TDAM may not update any FLS. Mutual funds, unlike GICs, are not insured by the Canada Deposit Insurance Corporation (CDIC) or any other deposit insurer nor guaranteed by any entity. ®/ The TD logo and other trade-marks are the property of TD Bank or a wholly-owned subsidiary, in Canada and/or other countries.



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