Insights & Resources

In case you missed our Wealth Matters webcast on July 12^th, we are providing some key highlights on what forces are driving the market’s behavior, how we are responding to this in our Assante Private Portfolios and best practices in the current market atmosphere.

This session was presented by Stephen Lingard, Senior Portfolio Manager and Head of Investment Research at CI Global Asset Management.

We believe that in periods of prolonged market volatility, value can be added through the use of strategic and tactical asset allocation.

Strategic and Tactical Asset Allocation

• Strategic asset allocation provides for more consistent returns throughout a market cycle (7-10 years), however your total return is capped at the expected returns of your individual holdings
• Tactical asset allocation searches for shorter term allocations and will move to different asset classes, regions, factors and sectors throughout the market cycle and take advantage of opportunities that arise during periods of volatility
• Now is a time for active management versus passive and stresses the need for tactical asset allocation
• Our Assante Private Portfolios incorporate strategic and tactical asset allocation

In recent years, bond and equity returns have been somewhat correlated. More recently, these asset classes are returning to their negative correlation which is traditionally the norm and provides for better portfolio diversification.

While rising interest rates tend to be negative for stock markets, it does present opportunities to receive higher yield returns on bonds, or through savings or GIC investments for cash savers that do not want to enter the equity market.

The Path Forward

• While we don’t have a crystal ball, we do think that Growth Stocks will continue to have challenges because of the inflationary environment, interest rates and consumer sentiment. A lot of these negative points though have already been priced in
• A lot of the overvaluation in equity markets, especially in the US has been wiped out. Some stocks were overvalued up to 25% so the recent downturn has brought us to more average valuations in this market
• We may see lower corporate profits in the coming months due to inflation and reduced spending – this could be the next portion of the downturn
• We should see equity valuations improve when the Central Bank of Canada and Federal Reserve turn off their interest rate hikes
• We don’t know if the bottom is here or if there is more to come – dollar cost averaging – entering the market slowly is the best way to ensure we are taking advantage of buying in at the lowest prices and laying the foundation for the next strong bull market

We would be pleased to meet with you to discuss and review your current portfolio. Please contact us or schedule a consultation at your convenience.