RISK ENGINEERING · PORTFOLIO CONSTRUCTION · DOWNSIDE MODELING
Architect Your Future: Investment Strategies Engineered for the Downside
Every strategy starts with the same question: what happens if we're wrong? The answer shapes everything that follows — from asset allocation to rebalancing triggers to the income your portfolio can safely generate.
We'll model your current allocation against the worst decades in market history — complimentary.
Why We Build Every Portfolio Around Its Failure Mode First
Lily Burnaby's engineering background shaped this firm's DNA from the day she founded Burnabilly Investments in 2006. In civil engineering, you model the failure mode before you model the operating mode. A bridge that works beautifully 95% of the time and collapses 5% of the time is not a good bridge. It's a liability — one that will eventually destroy everything it was built to carry.
We apply the same logic to the $340 million we manage. Every portfolio is stress-tested against historical drawdown scenarios — 1973, 2000, 2008, 2020 — before a single dollar is invested. If a 30% equity drawdown would cause you to miss a critical financial goal, your equity allocation is already set below that threshold. If a two-year income disruption from a dividend cut would force you to sell equities at depressed prices, the fixed-income sleeve is sized to bridge that gap without touching your growth holdings.
Does that sound conservative? It is — deliberately. We'd rather build a portfolio that survives the decade than one that looks brilliant for 18 months before a drawdown forces a panicked liquidation at exactly the wrong time. Across our six-person team, we've collectively managed portfolios through the dot-com crash, the Global Financial Crisis, the COVID drawdown, and the 2022 rate shock. In every case, the clients who came through best were the ones whose portfolios were already built for the downside before the downside arrived.
This philosophy is embedded in the Investment Policy Statement (IPS) we develop with every client. The IPS isn't a marketing document — it's a governing document. It defines your return objectives in real after-tax terms, your maximum drawdown tolerance, your income requirements, and the specific conditions under which we would change course. Every trade we execute is traceable back to your IPS. You can read more about how our discretionary portfolio management service operationalizes this approach.
Six Allocation Frameworks Built for Different Timelines and Risk Budgets
Which strategy fits your situation? That depends on your IPS — your return objectives, drawdown tolerance, time horizon, and income needs. Here are the six allocation frameworks we build from. Each is a starting point, not a finished product. Your portfolio is customized within these frameworks based on the specific numbers in your IPS. If you'd like to see how these strategies have performed historically, visit our performance page for real client case studies.
Conservative Income
Best for: Retirees in the drawdown phase, capital preservation mandates, strike funds, and operating reserves requiring near-term liquidity.
The fixed-income sleeve emphasizes investment-grade Canadian corporate bonds and GICs with laddered maturities, ensuring predictable cash flows aligned to your withdrawal schedule. The equity component focuses on large-cap Canadian dividend payers with 10+ year track records of uninterrupted distributions. We avoid reaching for yield — higher-yielding securities often carry hidden credit risk that materializes in exactly the environment where you need stability most.
Balanced Growth
Best for: Pre-retirees 5–15 years from withdrawal, corporate surplus with medium-term horizons, moderate-risk institutional reserves.
Our most commonly selected framework. Balanced Growth is designed for clients who need meaningful real returns but can't absorb a 2008-style drawdown without derailing their financial plan. The fixed-income allocation acts as ballast during equity selloffs, while the global equity sleeve provides geographic diversification beyond Canada's energy- and financials-heavy TSX. The alternatives component — typically real return bonds or infrastructure-linked instruments — provides inflation hedging without introducing illiquidity.
Growth
Best for: Long-horizon individual investors, growth-oriented family trusts, next-generation accounts.
Growth is appropriate when your time horizon exceeds 15 years and you have no near-term income requirements from the portfolio. The higher equity weighting captures more upside over full market cycles, but the trade-off is real: a 25–30% drawdown means a $2 million portfolio could temporarily decline to $1.4–1.5 million. If that number would keep you awake at night or prompt a call to sell, this isn't the right framework for you — and we'll say so during the IPS process. The 25% fixed-income floor ensures we always have dry powder to rebalance into equities during drawdowns, buying when others are selling.
Corporate Surplus
Best for: Business owners with retained earnings, professional corporations, holding companies.
Corporate surplus investing requires a fundamentally different lens than personal portfolio management. The tax treatment of investment income inside a Canadian-controlled private corporation (CCPC) — the interplay between the Capital Dividend Account, the Refundable Dividend Tax On Hand, and the passive income thresholds that claw back the Small Business Deduction — drives allocation decisions as much as risk tolerance does. We coordinate directly with your accountant to ensure every investment decision is evaluated on an after-corporate-tax, after-personal-tax basis. Learn more about this on our corporate surplus management service page.
Institutional Reserve
Best for: Non-profits, associations, unions, endowments, foundations with formal spending policies.
Institutional clients face governance constraints that individual investors don't — board approvals, spending rules, audit requirements, and fiduciary duties that extend beyond any single decision-maker. We structure institutional portfolios with tiered liquidity: a short-term operating reserve (0–12 months of expenditures in cash and near-cash), a medium-term buffer (12–36 months in short-duration fixed income), and a long-term growth pool invested according to the organization's risk tolerance and spending rule. Quarterly reporting is formatted for board presentation, and we attend board meetings when requested. Our institutional solutions are detailed on the services page.
Concentrated Position Diversification
Best for: Executives, founders, recipients of share-based compensation with outsized single-stock exposure.
When 40%, 60%, or 80% of your net worth is tied to a single stock, standard portfolio theory doesn't apply — your risk isn't "market risk," it's company-specific risk. A single earnings miss, regulatory action, or management scandal can destroy decades of accumulated wealth in weeks. We build multi-year transition plans that systematically diversify concentrated positions while managing capital gains tax liability, respecting insider trading windows and blackout periods, and preserving any tax-loss carryforwards. The plan specifies exact quantities and timelines, reviewed quarterly and adjusted for changes in the stock's valuation, your tax situation, or your liquidity needs.
The Four Quantitative Tools Behind Every Portfolio Decision
Wondering what "stress-tested" actually means in practice? Here are the four quantitative tools we run on every portfolio before implementation — and quarterly thereafter. These aren't theoretical exercises. They produce specific numbers that directly determine your allocation. Every client receives the full output in their Open Book dashboard.
Monte Carlo Simulation
We generate 10,000 randomized return sequences to estimate the probability distribution of your portfolio outcomes over your full planning horizon. For individuals, we model to age 95 and 100. For institutions, we model to the organization's stated perpetuity target or reserve horizon.
Why it matters: your portfolio doesn't earn the "average" return. It earns a specific, unrepeatable sequence. Retiring into a 2000–2002 drawdown produces a fundamentally different outcome than retiring into a 2009–2011 recovery — even if the 20-year average return is identical. Monte Carlo captures the full distribution of possibilities, including the ugly tail scenarios that straight-line projections ignore. We focus on the 10th percentile outcome — the scenario where almost everything goes wrong — because if your plan still works at the 10th percentile, it works.
Historical Stress Testing
We take actual return sequences from the worst periods in market history — 1929–1932, 1973–1974, 2000–2002, 2007–2009, and 2020 — and apply them directly to your proposed portfolio. Not hypothetical. Not smoothed. Not averaged across asset classes that didn't exist yet.
We don't invent scenarios. We replay history. If your current allocation would have breached your drawdown tolerance during the 2008–09 crisis — when Canadian equities dropped 43% peak-to-trough and even investment-grade corporate bonds temporarily lost liquidity — we adjust the allocation before you invest, not after. You see the exact dollar impact on your specific portfolio. This is the test that changes people's minds about how much equity exposure they can actually tolerate, and it's one reason our clients didn't panic-sell during March 2020.
Correlation Analysis
We build custom correlation matrices between your client-specific exposures — especially real estate, private business equity, and pension entitlements — and the liquid asset classes in your portfolio. Standard off-the-shelf matrices don't account for what you already own outside your investment accounts.
Most Canadian high-net-worth clients own real estate — often a lot of it. A Toronto dentist with a $3 million practice, a $2.5 million home, and a $1.2 million investment property already has 70%+ of their net worth correlated to Canadian economic conditions and interest rates. Adding a portfolio full of Canadian bank stocks and REITs doesn't diversify anything — it concentrates risk further. We build correlation models that reflect your total balance sheet, then allocate the liquid portion specifically to offset the risks you already carry.
Drawdown Probability Modeling
What's the probability your portfolio declines by 10%, 20%, 30% in any given 12-month period? We calculate it before you invest, present it in a clear table, and ask you to confirm you can live with those numbers.
This is the question nobody wants to answer, which is exactly why we answer it first. Every prospective client sees their drawdown probability table before signing a portfolio management agreement. The table shows the probability of various drawdown levels over 1-year, 3-year, and 5-year rolling periods, alongside the expected recovery time for each scenario based on historical data. No surprises. If the numbers make you uncomfortable, we adjust the allocation until they don't — even if that means accepting a lower expected return. A portfolio you can stick with through a crisis will always outperform a portfolio you abandon during one.
How We Match You to the Right Strategy — With Your Data, Not Ours
Wondering how we decide which strategy fits? We don't. You do — with our data. The role of our portfolio managers is to present the trade-offs clearly enough that the right choice becomes obvious to you.
During the IPS development process, we present your financial situation modeled across multiple strategy allocations. Each model shows projected returns, drawdown probabilities, income capacity, and Monte Carlo survival rates to age 95 and 100. For corporate clients, we add after-tax comparisons showing the CDA and RDTOH impact of each allocation. For institutional clients, we model against the organization's spending rule and show the probability of maintaining real purchasing power over 10, 20, and 30-year horizons.
You see the trade-offs in writing. More return means more drawdown risk. More income means less growth. More safety means accepting that inflation will erode purchasing power over time. There's no free lunch — and we'd rather show you that honestly than pretend one strategy is "best." This transparency is central to who we are as a firm and how we've operated since 2006.
Most clients land on Balanced Growth or Corporate Surplus. But "most" doesn't mean "you." Your IPS is yours. It reflects your numbers, your goals, your risk tolerance — not a model portfolio built for a hypothetical average investor. And because we're a team of six managing $340 million, your portfolio manager knows your IPS intimately. There's no handoff to a junior associate who's never read your file.
Define Objectives
Return requirements in real after-tax terms. Income needs by year. Time horizon to first withdrawal and to plan completion. Liquidity constraints — what you might need access to on 30, 90, or 365 days' notice. Tax situation — marginal rate, corporate structure, capital gains room, loss carryforwards. Every number is specific to your situation, sourced from your tax returns and financial statements, not estimates.
Model the Scenarios
We present 2–3 allocation models with full probability distributions, historical stress-test results, drawdown estimates, and income projections. You compare them side by side in a document that's typically 15–20 pages — not a glossy one-pager. Each model includes the specific securities or ETFs we would use to implement it, along with the fee structure and all-in cost projections. You can review our fee transparency commitment on the services page.
Choose and Commit
You select a strategy. It's documented in your IPS — a formal, signed document that governs every subsequent decision. We build and implement the portfolio within 5–10 business days through our custodian, CIBC Mellon. Every trade after that is governed by the IPS you approved. If we ever want to deviate from the IPS, we call you first and explain why. If you disagree, the IPS stands.
Review and Adapt
Quarterly performance review against your IPS benchmarks — available in your Open Book dashboard and discussed in a call or meeting with your portfolio manager. Annual IPS review to account for life changes — retirement, business sale, inheritance, divorce, health events, or simply a change in how much risk feels acceptable after living through a drawdown. The strategy evolves as your situation does. We also publish our broader market outlook quarterly so you understand the context behind any allocation adjustments we recommend.
Want to See How Your Current Allocation Holds Up Under Stress?
Send us your current statements. We'll run the full suite — Monte Carlo simulation, historical stress tests from 1973, 2000, 2008, and 2020, correlation analysis against your total balance sheet, and drawdown probability modeling. The analysis is complimentary and typically runs 8–12 pages. You keep it regardless of whether you become a client. No pitch, no obligation — just the numbers your current advisor probably hasn't shown you.
Or call us directly at (807) 876-1862