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CanadaLiving through a pandemic requires resilience, planning and patience. The COVID-19 pandemic has changed how we work, learn, socialize and invest. To help contain the virus, public health experts say we must follow the ‘3 Ws’: wear a mask, wash your hands, watch your distance in public.
Help your clients to focus on what they can control amid the uncertainty. Clients can take a ‘three Rs’ approach to their portfolios: Refocus, Review and Rebuild.
STEP 1: REFOCUS
Help your clients refocus on their goals by analyzing their circumstances and appetite for risk. Has anything changed?
Have an open conversation with your clients about how they can move forward to achieve their financial objectives.
STEP 2: REVIEW
Whether your clients rode out the downturn or waited on the tarmac, their portfolios may look different today than they did in January. Consider consolidating, substituting and complementing their holdings to help them prepare for what’s next. Together, these ideas will help you identify gaps in your clients’ portfolios, which can point the way to solutions that will help them rebuild.
STEP 3: REBUILD - Back to Basics
Focus on the fundamentals of research and risk management to give investors a strong core of fixed income – with the flexibility to take advantage of new opportunities.
A solid core
Currency-Managed Global Exposure
Diversification
More Yield, Without More Risk
Take another look at the foundation of your clients’ portfolios. A strong core of fixed income can help reduce drawdowns and provide your clients with stable returns.
STEP 3: REBUILD - Quality Counts
Amidst the uncertainty, investors may be drawn to the resilience of high-quality and well-managed companies with solid balance sheets. High-quality companies tend to regularly pay and grow dividends, increasing their return potential.
AVERAGE ANNUALIZED RETURN BY DIVIDEND POLICY
30-Year Period Ending September 30, 2020
|
DIVIDEND GROWERS |
DIVIDEND-PAYING STOCKS |
NON-DIVIDEND-PAYING STOCKS |
S&P 500 INDEX |
| 9.85% | 8.78% | 4.86% | 7.30% |
It can be a challenge to increase quality while maintaining growth. An experienced manager with a dividend-focused approach can help.
STEP 3: REBUILD - Return of Active
91% of investors want to have investments that can outperform the markets and 90% believe that risk management is important*. If your clients share these views, they may want to reduce exposure to passive or index-like products. Popular stocks tend to make up an outsized portion of any benchmark. This is certainly true of the FAANG stocks today.
FAANG STOCKS' WEIGHTS AS A % OF THE MSCI WORLD INDEX
As of September 30, 2020
|
|
AMAZON |
APPLE |
NETFLIX |
|
| 2.26% | 4.81% | 6.68% | 0.79% | 3.13% |
Take clients beyond the benchmarks. Skilled active managers can help navigate volatility while seeking areas of opportunity.
*Franklin Templeton Global Investor Sentiment Survey 2018
STEP 3: REBUILD - Sector Growth Trends
The current crisis has, in many cases, accelerated change in high growth areas like cloud computing, e-payment and health care. This may be viewed as creating opportunity amidst the chaos.
IN THE U.S., TECH AND HEALTHCARE ARE OUTPACING THE FIELD
Return on Equity: 15-Year Period Ending September 30, 2020
|
MSCI USA INFO TECH INDEX |
MSCI USA HEALTH CARE INDEX |
MSCI USA INDEX |
| 28.27% | 17.17% | 11.65% |
Take advantage of market trends with investment experts who are based in the heart of Silicon Valley and aware of innovations as they evolve.
Keep updated with the latest resources and insights
STEP 1: REFOCUS
Performance of the S&P 500 Index
Source: S&P 500, as of August 31, 2020Life during a pandemic
The recovery of the global economy will likely be a gradual process, with more uncertainty and obstacles to overcome. In the meantime, investor sentiment is supported by massive monetary and fiscal backstops.
Help your clients refocus on their goals by analyzing their circumstances and appetite for risk. Has anything changed?
Have an open conversation with your clients about how they can move forward to achieve their financial objectives.
Emotionally invested:
the market cycle
Loss aversion
STEP 2: REVIEW
Contents may have shifted
Whether your clients rode out the downturn or waited on the tarmac, their portfolios may look different today than they did in January. Consider consolidating, substituting and complementing their holdings to help them prepare for what’s next. Together, these ideas will help you identify gaps in your clients’ portfolios, which can point the way to solutions that will help them rebuild.
Get a second opinion
Even the best portfolios need adjustments from time to time. BESTBUILT ® HYPOTHETICALS allows you to analyze portfolios and test your best ideas using the entire universe of Canadian mutual funds and ETFs.
TRY BESTBUILT NOW
Focus on the fundamentals of research and risk management to give investors a strong core of fixed income – with the flexibility to take advantage of new opportunities.
A solid core
Build a core fixed income strategy around high-quality government and corporate bonds.
Currency-Managed Global Exposure
Invest abroad for enhanced returns from yields and currencies while reducing exchange rate exposure.
Diversification
Take a multi-sector approach to help your clients benefit from the best yield opportunities while reducing volatility.
More Yield, Without More Risk
Increase income without adding significant risk.
Take another look at the foundation of your clients portfolios. A strong core of fixed income can help reduce drawdowns and provide your clients with stable returns.
Amidst the uncertainty, investors may be drawn to the resilience of high-quality and well-managed companies with solid balance sheets.
High-quality companies tend to regularly pay and grow dividends, increasing their return potential.
Average Annualized Return by Dividend Policy
30-Year Period Ending August 31, 2020It can be a challenge to increase quality while maintaining growth. An experienced manager with a dividend-focused approach can help.
91% of investors want to have investments that can outperform the markets and 90% believe that risk management is important*. If your clients share these views, they may want to reduce exposure to passive or index-like products.
Popular stocks tend to make up an outsized portion of any benchmark. This is certainly true of the FAANG stocks today.
Historical Weights as a % of the MSCI World Index
As of August 31, 2020Take clients beyond the benchmarks. Skilled active managers can help navigate volatility while seeking areas of opportunity.
*Franklin Templeton Global Investor Sentiment Survey 2018The current crisis has, in many cases, accelerated change in high growth areas like cloud computing, e-payment and health care. This may be creating opportunity amidst the chaos.
In the U.S., Tech and Healthcare are Outpacing the Field
Return on Equity: 15-Year Period Ending August 31, 2020Take advantage of market trends with investment experts who are based in the heart of Silicone Valley and aware of innovations as they evolve.
We’re here to help. Call or email your Franklin Templeton wholesaler to learn how we can support you, your clients and your prospective clients in today’s uncertain markets.
