MARKET OUTLOOK
While the VIX remains just off 2019 lows, investors must remain vigilant and focus on portfolio management. The average retirement account holds three asset classes: equities, fixed income and cash. On the equity side, we recommend a portfolio of 30 stocks diversified by geography, industry and size of company. For fixed income, a laddered corporate bond portfolio and inflation linked bonds are critical. Lastly, we recommend holding cash in varying percentages to dampen the volatility of the market. An investor’s asset class allocations and the constituents within each asset class should be reflective of their time horizon and risk profile.
Taking this approach means investors can have comfort knowing their portfolio does not need to be adjusted for every news headline. For example, the bond market is pricing in a 0.25 or 0.5 per cent cut in interest rates by the Federal Reserve on Wednesday. Whether the cut happens, the magnitude of the cut is larger or smaller than expected and/or the language around the cut is dovish or hawkish, if an investor’s portfolio reflects their time horizon and risk profile, it’s unlikely any changes are required.
It would behoove investors to focus on the bigger picture. If your time horizon is longer than a decade, be in equities and be patient. The S&P 500 hit new highs 219 times this decade and can continue doing so over the long term.
BROOKFIELD ASSET MANAGEMENT (BAMa.TO)
- Then: $63.56
- Now: $65.07
- Return: 2%
- Total return: 3%
HEICO CORP (HEI.N)
- Then: $104.11
- Now: $137.63
- Return: 32%
- Total return: 32%
HDFC BANK (HDB.N)
- Then: $122.72
- Now: $115
- Return: -6%
- Total return: -6%
Return average: 10%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BAMa | Y | Y | Y |
| HEI | Y | Y | Y |
| HDB | Y | Y | Y |