This report was written by Benjamin Felix, Raymond Kerzérho, and Braden Warwick. The ideas, opinions, and recommendations contained in this document are those of the authors and do not necessarily represent the views of PWL Capital Inc.
Published: Winter 2024
This guide describes PWL Capital’s methodology for estimating the expected returns, standard deviations, and correlations of major asset classes over a 30-year planning horizon. These parameters enable Canadian financial planners to produce financial projections for their clients. We discuss the expected risk and return for market-cap-weighted and factor-tilted portfolios. Factor-tilted portfolios are designed to replicate the factor exposure of the DFA Global Allocation funds. Since a dollar of return earned in the form of ordinary income, Canadian dividend, foreign dividend, and capital gains do not have the same after-tax value, this document addresses how we estimate the composition of expected returns. We also discuss our methodology to estimate the primary residence’s expected price appreciation and standard deviation. Unless mentioned otherwise, all the data in this document is dated December 31, 2022. This data is provided for illustration purposes only. PWL publishes financial planning assumptions data updates semi-annually.
