Financial Planning Assumptions (Factor Tilted Portfolio)

Introduction

This guide is intended to provide Canadian financial planners with our best estimates of future asset
class returns and volatilities to produce financial projections for their clients. This document assumes
that investors hold a broadly diversified portfolio of publicly-traded Canadian fixed-income securities
and global equity, including both developed and emerging markets. These estimates are valid uniquely
in the context of an investor who purposely avoids concentration in one or a few securities or sectors.
Our investment horizon is 30 years. For users of the NaviPlan financial planning software, key inputs are
highlighted in green. We have added an appendix to provide users of NaviPlan with data presented in
a more compatible format.

We have created this report specifically to help financial advisors investing with mutual funds from
Dimensional Fund Advisors Canada. The asset class expected returns, standard deviations, correlations,
and distribution yields are designed to replicate the characteristics of the DFA Global Allocation funds.
Importantly, these characteristics take into account the exposure of these funds to the Fama-French
factors.

Table of Contents

1. Introduction
2. Q1 2023 Improvements to Methodology
3. Expected Inflation
4. Primary Residence
5. Asset Class Expected Returns
6. Expected Standard Deviations
7. Expected Correlations
8. Composition of Asset Class Returns
9. Portfolio Expected Returns
10. Appendix: Financial Planning Assumptions – Naviplan Input Format
11. Appendix 2: Estimating Factor-Tilted Fixed-Income Expected Return

This report was written by the Research team at PWL Capital Inc. 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.