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Can’t stomach the wild volatility in the market? Consider these hedging options

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It’s always good to buy insurance before you need it, as some investors might be realizing these days.

The sharp drop-off in markets earlier this weekadded to a more gradual recent decline that has put to the test just how well retail investor portfolios have hedge protection built in to soften the blow when stocks decline.

There are a growing number of choices to get some downside protection, and some old standbys are looking more effective, though they all require buying in ahead of time — or paying the price.

“Ifyou aren’t balanced and hedged all the time, then you find yourself in a spot now where it becomes more expensive,” said Dustin Reid, head of fixed income strategies at Mackenzie Investments.

“It’s probably still worth having some hedges on, but clearly the premium that you pay on those hedges are going to eat into your returns a fair bit more now than they would have six months ago.”

The volatility index, one possible ETF option Reid pointed to as a way to see some gains when equities decline, shows how quickly insurance prices can shift. After trading mostly around 13 in recent months, the CBOE Volatility Index shot up to above 65 on Monday before closing at almost 39, its highest level since the early pandemic panic. It’s since come down to roughly 26 as of Thursday morning, but that’s still a big markup from last week.

“Having VIX outright, or something like that, while equities are selling off, you’re probably not going to make up all of (the stock losses), but you’re going make up some of it,” said Reid.

Providing downward protection is also what’s offered by a relatively new product called a buffer exchange-traded fund.

The product provides downside protection through the use of option-hedging strategies that would otherwise be a little too advanced for average investors, though it comes at the cost of some of the upside as well.

BMO launched some buffered ETF options last October, which provide protection against the first 15 per cent of market declines while also capping gains at 10 per cent.

“It stems from us seeing this demand from our customer base to have some downside protection and being able to add an investment into your broader portfolio that gives you that peace of mind,” said Sara Petrcich, head of ETFs and structured solutions at BMO Global Asset Management.

She said the product is meant as a more conservative investment, making it especially suitable for investors later in life who maybe don’t have the long time horizons to wait out market declines, or for those who might want to take on risk in other areas.

“It’s just another tool in your kit so that you can have some downside protection. You’re cognizant of it, and then, you know, maybe you add a little bit more risk in different investments.”

The buffer ETFs offer the 15 per cent downside protection for a year on an S&P 500 reference index, based on where markets are when they’re issued. So an investor buying in now to the July offering has already lost some of that buffer.

Then there is the classic option of bonds, or fixed income, a category that fell out of favour with some investors in recent years as low returns turned into outright declines a couple of years back.

“That is still a bitter memory that lingers,” said David Rosenberg, head of Rosenberg Research.

But the losses came from a very unusual time in the fallout of the pandemic, when the entire 1970s inflation fight was stuffed into 18 months, said Rosenberg, while more recently they’ve been a good bet.He’s very bullish on fixed income.

“The bond market, it’s been a great place to be since last fall,” he said.

He’s worried that too few investors have rebalanced their portfolio during this bull run in stocks, as Canadians hold a record high 70 per cent of their financial assets in equities.

“We are in unprecedented territory and that is because throughout this entire bull market, diversification somehow became a dirty 15-letter word.”

Rosenberg said some have stayed away from fixed income over concerns inflation could come back, which would eat into returns, but he said that fear is misplaced.

“The reluctance to buy bonds really comes from the temptation to extrapolate your most recent experience into the future. And that typically is a mistake, because inflation is not coming back.”

He also likes precious metals as a hedge, though buying into gold these days also means buying at a market high.

For those who don’t want to move too far out of equities, Rosenberg recommends bond proxies on the stock market like utilities, pipelines, telecoms and select real estate trusts.

But he warns against being too heavy in stocks, saying the extra risk compared with the U.S. 10-year treasury doesn’t justify the investments.

“The bottom line is that, are you getting paid to take on the risk to be all-in on equities? And the answer is no, you’re not and you haven’t been for some time.”

He said investors should focus on building more insurance into their portfolios.

“I would recommend going forward that any reflexive rebound that we see in the stock market, that those proceeds be used right away to bring some semblance of sanity back to the household asset mix.”

This report by The Canadian Press was first published Aug. 8, 2024.

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Flames re-sign defenceman Ilya Solovyov, centre Cole Schwindt

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CALGARY – The Calgary Flames have re-signed defenceman Ilya Solovyov and centre Cole Schwindt, the NHL club announced Wednesday.

Solovyov signed a two-year deal which is a two-way contract in year one and a one-way deal in year two and carries an average annual value of US$775,000 at the NHL level.

Schwindt signed a one-year, two-way contract with an average annual value of $800,000 at the NHL level.

The 24-year-old Solovyov, from Mogilev, Belarus, made his NHL debut last season and had three assists in 10 games for the Flames. He also had five goals and 10 assists in 51 games with the American Hockey League’s Calgary Wranglers and added one goal in six Calder Cup playoff games.

Schwindt, from Kitchener, Ont., made his Flames debut last season and appeared in four games with the club.

The 23-year-old also had 14 goals and 22 assists in 66 regular-season games with the Wranglers and added a team-leading four goals, including one game-winning goal, in the playoffs.

Schwindt was selected by Florida in the third round, 81st overall, at the 2019 NHL draft. He came to Calgary in July 2022 along with forward Jonathan Huberdeau and defenceman MacKenzie Weegar in the trade that sent star forward Matthew Tkachuk to the Panthers.

This report by The Canadian Press was first published Sept. 18, 2024.

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Oman holds on to edge Nepal with one ball to spare in cricket thriller

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KING CITY, Ont. – Oman scored 10 runs in the final over to edge Nepal by one wicket with just one ball remaining in ICC Cricket World Cup League 2 play Wednesday.

Kaleemullah, the No. 11 batsman who goes by one name, hit a four with the penultimate ball as Oman finished at 223 for nine. Nepal had scored 220 for nine in its 50 overs.

Kaleemullah and No. 9 batsman Shakeel Ahmed each scored five in the final over off Sompal Kami. They finished with six and 17 runs, respectively.

Opener Latinder Singh led Oman with 41 runs.

Nepal’s Gulsan Jha was named man of the match after scoring 53 runs and recording a career-best five-wicket haul. The 18-year-old slammed five sixes and three-fours in his 35-ball knock, scoring 23 runs in the 46th over alone when he hit six, six, four, two, four and one off Aqib Ilyas.

Captain Rohit Paudel led Nepal with 60 runs.

The 19th-ranked Canadians, who opened the triangular series Monday with a 103-run win over No. 17 Nepal, face No. 16 Oman on Friday, Nepal on Sunday and Oman again on Sept. 26. All the games are at the Maple Leaf Cricket Ground.

The eight World League 2 teams each play 36 one-day internationals spread across nine triangular series through December 2026. The top four sides will go through to a World Cup qualifier that will decide the last four berths in the expanded 14-team Cricket World Cup in South Africa, Zimbabwe and Namibia.

Canada (5-4) stands second in the World League 2 table. The 14th-ranked Dutch top the table at 6-2.

Oman (2-2 with one no-result) stands sixth, ahead of Nepal (1-5).

Canada won all four matches in its opening tri-series in February-March, sweeping No. 11 Scotland and the 20th-ranked host Emirates. But the Canadians lost four in a row to the 18th-ranked U.S. and host Netherlands in August.

Canada which debuted in the T20 World Cup this summer in the U.S. and West Indies, is looking to get back to the showcase 50-over Cricket World Cup for the first time since 2011 after failing to qualify for the last three editions. The Canadian men also played in the 1979, 2003 and 2007 tournaments, exiting after the group stage in all four tournament appearances.

The Canadian men regained their one-day international status for the first time in almost a decade by finishing in the top four of the ICC Cricket World Cup Qualifier Playoff in April 2023 in Bermuda.

This report by The Canadian Press was first published Sept. 18, 2024

The Canadian Press. All rights reserved.

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Vancouver Canucks will miss Demko, Joshua, others to start training camp

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PENTICTON, B.C. – Rick Tocchet has already warned his Vancouver Canucks players — the looming NHL season won’t be easy.

The team made strides last year, the head coach said Wednesday ahead of training camp. The bar has been raised for this year’s campaign.

“To get to the next plateau, there are higher expectations and it’s going to be hard. We know that,” Tocchet said in Penticton, B.C., where the team will open its camp on Thursday.

“So that’s the next level. It starts day one (on Thursday). My thing is don’t waste a rep out there.”

The Canucks finished atop the Pacific Division with a 50-23-9 record last season, then ousted the Nashville Predators from the playoffs in a gritty, six-game first-round series. Vancouver then fell to the Edmonton Oilers in a seven-game second-round set.

Last fall, Jim Rutherford, the Canucks president of hockey operations, said everything would have to go right for the team to make a playoff push. That doesn’t change this season, he said, despite last year’s success.

“The challenges will be greater, certainly. But I believe the team that we started with last year, we have just as good a team to start the season this year and probably better,” he said.

“As long as the team builds off what they did last year, stick to what the coaches tell them, stick to the system, stick together in good times and bad times, this team has a chance to do pretty well.”

Some key players will be missing as Vancouver’s training camp begins, however.

Canucks general manager Patrik Allvin announced Wednesday that star goalie Thatcher Demko will not be on the ice when the team begins it’s pre-season preparation.

Allvin did not disclose the reason for Demko’s absence, but said the 28-year-old American has been making progress.

“He’s been in working extremely hard and he seems to be in a great mindset,” the GM said.

Demko missed several weeks of the regular season and much of Vancouver’s playoff run last spring with a knee injury.

The six-foot-four, 192-pound goalie has a career 213-116-81 regular-season record with a .912 save percentage, a 2.79 goals-against average and eight shutouts across seven seasons with the Canucks.

Allvin also announced that veteran centre Teddy Blueger and defensive prospect Cole McWard will also miss the start of training camp after each had “minor lower-body surgery.”

Vancouver previously announced winger Dakota Joshua won’t be present for the start of camp as he recovers from surgery for testicular cancer.

Tocchet said he’ll have no problem filling the holes, and plans to switch his lines up a lot in Penticton.

“Nothing’s set in stone,” he said. “I think it’s important that you have different puzzles at different times.”

The coach added that he expects standout centre Elias Pettersson to begin on a line with Canucks newcomer Jake DeBrusk.

Vancouver inked DeBrusk, a former Boston Bruins forward, to a seven-year, US$38.5 million deal when the NHL’s free agent market opened on July 1.

The glare on Pettersson is expected to be bright once again as he enters the first year of a new eight-year, $92.8 million contract. The 25-year-old Swede struggled at times last season and put 89 points (34 goals, 55 assists) in 82 games.

Rutherford said he was impressed with how Pettersson looked when he returned to Vancouver ahead of camp.

“He seems to be a guy that’s more relaxed and more comfortable. And for obvious reasons,” said the president of hockey ops. “This is a guy that I believe has worked really hard this summer. He’s done everything he can to play as a top-line player. … The expectation for him is to be one of the top players on our team.”

A number of Canucks hit milestones last season, including Quinn Hughes, who led all NHL defencemen in scoring with 92 points and won the Norris Trophy as the league’s top blue liner.

Several players could once again have career-best years for Vancouver, Tocchet said, but they’ll need to be consistent and not allow frustration to creep in when things go wrong.

“You’ve just got to drive yourself every day when you have a great year,” the coach said. “You’ve got to keep creating that environment where they can achieve those goals, whatever they are. And the main goal is winning. That’s really what it comes down to.”

This report by The Canadian Press was first published Sept. 18, 2024.

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