Insights & Resources

The markets continue to grapple with many different variables where in isolation is difficult to get a handle on however in confluence make matters exponentially more complex. 

In this article, our team at CI Multi Asset Management, provides a detailed and timely breakdown of the overall Russian/ Ukraine exposure within the Assante Private Portfolios.  

Portfolio Update

• We have gone through the portfolios to make sure the investments make sense with the time horizons matched to the client portfolios
• Russia is an exporter of commodities and as a result these sanctions will lead to higher commodity prices for longer. This will also lead to higher inflation in the shorter term as well
• Given these economic sanctions the European Union (EU) will be more adversely affected by these events given they are more connected to Russia. Generally this is not a positive result for the EU in the short term which will likely cause the European Central Bank (ECB) to take a more dovish (softer) stance in their monetary policy actions
• Markets have gone down anywhere from 2 to 20% however the fundamentals still remain strong:
  1. Strong job market
  2. Wage growth
  3. Increasing consumer demand
  4. US households are flush with cash estimated $3.7 Trillion

Portfolio Positioning

• We increased government bond exposure incrementally upon the weakness in this sector in late 2021
• We remain overweight equity (stocks) in our portfolios
• We remain overweight value stocks (as opposed to growth stocks) in our portfolios 
• We are overweight Canada & EAFE (Europe, Australasia, Middle East) 
• From a sector perspective we are overweight energy, materials and financials 
• In lieu of government bonds we are still holding Gold, CAD, USD and YEN currency

Russian/Ukrainian Exposure

The direct exposure to Russia and Ukraine within the Assante Private Portfolios is extremely small and effectively limited to a few lines of bonds held within Global Fixed Income Pool and CI Income. On the equity (stock) side the team sold off positions in Sberbank in late-February, leaving the emerging market fund with a 0% market weight to Russia. Note that the CI Global Asset Management Fixed Income Team also sold off a majority of their holdings in Russia (~75% sold) and Ukraine (~50% sold) in the last week of January. 

There is about 0.02% worth of indirect exposure to Russia, through ownership of the iShares Core MSCI Emerging Markets ETF (IEMG), which is held in Global Equity Pool and Global Equity Allocation Pool.

As always, we are here to support you with your investments and achieving your financial goals. Please do not hesitate to contact us.