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CanadaHumans are incredibly resilient.
Last year, how many of us knew what it meant to “flatten the curve?” Now we’re all experts on the nuances of “quarantine” vs “self-isolation.” We wear masks in public. We stand two meters apart at the grocery store. And because we’ve committed to the principles of social distancing, Canadian cities and business are cautiously reopening.
As our focus starts to extend beyond our immediate needs, it’s time for investors to return to their long-term plans. The three R approach – Refocus, Review & Rebuild – will help you and your advisor prepare for tomorrow by focusing on what you can control today.
STEP 1: REFOCUS
Performance of the S&P 500 Index
February 19,2020 – March 20, 2020
Source: S&P 500, as of March 20, 2020What just happened?
This winter, the S&P 500 suffered its fastest 30% decline since 1931. In just 31 days, one of the longest bull runs in history…was history. By mid-June, the markets had quietly recovered, but if anything’s certain right now it’s that more uncertainty is on the way
Take an honest look at your circumstances, goals and appetite for risk. Has anything changed?
A scarcity mindest is one of the side-effects of life under lockdown. The same instinct that compels people to horde hand sanitizer can compel investors to avoid risk.
Have an open conversation with your advisor about what’s changed in your situation and in the markets – and what those changes mean for your long-term plans.
Emotionally invested:
the market cycle
Loss aversion
STEP 2: REVIEW
Whether you rode out the downturn or waited on the tarmac, your portfolio may look different today than it did in January. Talk to your advisor about consolidating, substituting and complementing your holdings to help prepare for what’s next.
Together, these considerations will help you identify gaps in your portfolio, which can point the way to solutions that will help you rebuild.
STEP 3: REBUILD
A crisis often accelerates trends that were already just beneath the surface. Talk to your advisor about bolstering your portfolio with solutions that are well-positioned to benefit from the following prevailing themes:
Focus on the fundamentals of research and risk management to give your portfolio 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 capture the best yield opportunities, while reducing volatility.
More Yield, Without More Risk
Increase income without adding significant risk.
Is your portfolio positioned to weather more storms? Talk to your advisor about how a strong core of fixed income can help reduce volatility and provide stable return on your investment.
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 March 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 investments that can outperform the markets and 90% believe risk management is important.2 If you share these views, consider adding actively-managed investments to your portfolio.
Active managers can pick a mix of stocks that don’t mirror the benchmark. That matters because benchmarks tend to be top-heavy with the most popular stocks, like the tech giants shown below.
Historical Weights as a % of the MSCI World Index
As of March 31, 2020Take your portfolio beyond the benchmarks. Work with your advisor to make sure your investments can ride out volatility while still benefiting from areas of growth.
*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 May 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.
Learn more. Talk to your advisor or call us at 1 (800) 387-0830.
