Advisors’ role has evolved greatly from transactional stockbrokers and mutual fund or insurance sales representatives to holistic wealth managers during the past couple of decades. But while skills such as tax, insurance, estate or strategic philanthropic planning have become increasingly more important, investments are still a critical part of what advisors do.
Helping clients achieve their life goals, including reaching retirement with enough assets from which to produce income for the rest of their days, relies heavily on being an astute investment manager who stays on top of current trends and strategies.
Here are 10 articles on investing themes and strategies published in the past year that are worth another read:
Catherine Wood launched Ark Investment Management LLC almost seven years ago to capture the potential of a coming wave of technological change. Since then, the New York-based firm has grown from a US$15-million venture into one in which the flagship exchange-traded fund (ETF) manages about US$18-billion in assets. Ark is finding opportunities in the convergence of robotics, energy storage, artificial intelligence, and cloud-based data storage. The applications include DNA sequencing, electric vehicles, self-driving cars, e-commerce, blockchain technology, and even space exploration. “We will see more disruption in the next five to 10 years than we have in the history of the world,” Ms. Wood predicts.
Could the burgeoning psychedelics sector end up spawning a major stock rally that could dwarf the cannabis-driven market mayhem of the past decade? “From a market perspective, you could argue the blue-sky opportunity for psychedelics is far, far greater [than for cannabis],” according to Maruf Raza, a partner and national director of public companies at MNP LLP in Toronto. That’s because the nascent sector is largely organized around disrupting the global anti-depressant market, which is worth tens of billions of dollars annually to pharmaceutical giants.
The Rolling Stones, Fleetwood Mac, Madonna, Drake, Justin Bieber, and the Weeknd have topped music charts during different decades thanks to diehard fans. Now, their songs have struck a chord with yield-seeking investors, too. Welcome to the music-royalty gold rush. Canadian investment funds and entertainment-focused firms have joined a global party in buying up rights to music catalogues that can generate royalty payments when songs are bought, streamed, performed, or used in Peloton fitness classes.
Inflation has always been a threat to investment portfolios but the recent surge in prices of everything from food and gas to housing and wages has advisors fielding more questions from clients about how it will affect their retirement savings. Laura Barclay, vice-president and senior portfolio manager at TD Wealth Private Investment Counsel in Markham, Ont., says a rising inflation environment is a good time to review asset allocation, and, in particular, the level of fixed income in a portfolio compared to equities.
A window of opportunity has opened for Canadian investors to bank up U.S. dollars in their investment portfolios and get more buying power to expand their international holdings. The Canadian dollar is currently trading at around 78 cents to the U.S. dollar – a big increase from a year ago, when it dipped below 70 cents at the onset of the COVID-19 pandemic as global trade almost froze and resources prices cratered. “It’s always good to buy the U.S. dollar when Canada is strong relative to the U.S.,” says Paul Harris, partner and portfolio manager at Harris Douglas Asset Management Inc. in Toronto.
India has struggled mightily with the COVID-19 pandemic, which has overwhelmed its health care system and reduced its economy to a crawl this past spring. But the world’s largest democracy is rebounding gradually and should still turn in a 2021 growth rate that is among the best in the global economy. “The last time we saw such a large country with similar long-term growth potential was when China was growing at double digits,” says Christine Tan, assistant vice president, portfolio management, and emerging-markets specialist at SLGI Asset Management Inc. in Toronto, who foresees growth of 7 to 8 per cent in the current fiscal year.
Recent data analysis by The Globe and Mail reveals that just 4 per cent of companies on the S&P/TSX Composite Index have a female chief executive officer and more than half of the companies on the same index have no women top executives at all. Yet, a 2020 Responsible Investment Association investor opinion survey shows 73 per cent of participants want a portion of their portfolio to be invested in organizations that provide opportunities for the advancement of women and diverse groups.
What goes up, must come down – eventually. Most investors know that, but the question of “when” has money managers torn between taking cover or riding out the pandemic bull market that has the experts perplexed. While much of the equity market’s strength is being fuelled by rock-bottom borrowing rates as central banks maintain low interest rate policies to keep cheap money flowing, that strength doesn’t appear to be waning as pockets of inflation appear and central banks signal they will eventually need to raise rates.
The approval of five additional state cannabis ballot measures in the U.S. federal election in November 2020, combined with strengthening balance sheets among the largest U.S. cannabis companies and increasingly bipartisan political support for legalization, has created an ideal entry point for investors. In fact, despite ongoing federal prohibition and onerous tax policies, U.S. cannabis companies make for better investments than those in Canada, says Vivien Azer, managing director and senior cannabis research analyst at Cowen Inc. in New York. “We are more constructive on the opportunity in the U.S. relative to the adult-use market in Canada,” she says.
Canada’s new harmonized equity crowdfunding rules are opening up financing options for startups and giving average investors the chance to gain from the potentially explosive growth of the country’s emerging small companies. Previously, rules were different across the country making it a challenge for small companies to run a national crowdfunding campaign. “One of the things that we heard from market participants was that it would be a benefit to startup businesses that want to raise capital nationally to have a harmonized regime,” says John Hinze, director of corporate finance at the B.C. Securities Commission.
For more from Globe Advisor, visit our homepage.
Feds announce $3M investment for Calgary’s Energy Transition Centre – Globalnews.ca
As Calgary attempts to become a centre for a transitioning energy industry, a new hub that focuses on clean energy in the city’s downtown core has received a major boost.
Federal ministers, along with Calgary Mayor Jyoti Gondek, were on hand Wednesday to announce a federal investment of more than $3 million towards the clean technology sector in Alberta, including more than $2.1 million to help fund the Energy Transition Centre.
Another $900,000 is earmarked for the Foresight clean technology accelerator, to provide training and investment attraction for Alberta clean technology companies.
“We are moving in the direction of seriously harnessing the potential of Calgary’s energy sector — the technology that we have resident in this sector for the future of the energy second,” University of Calgary chancellor Deborah Yedlin said. “This is our Wayne Gretzky moment, we’re asking towards where the puck is going.”
The Energy Transition Centre will take up an entire vacant floor at the Ampersand building in Calgary’s downtown core.
Barring any issues with COVID-19, officials said the plan is for the centre to open on March 1.
IEA head says Canadian oil industry can be part of energy transition if it gets cleaner
“This innovation hub will help small- and medium-sized businesses develop clean energy technologies that will help meet a growing global demand for environmentally-friendly products and processes,” said Daniel Vandal, federal minister responsible for Prairies Economic Development Canada.
According to officials, the Energy Transition Centre is set to be a space to connect Canadian energy companies with clean energy start-ups, innovators and investors with access resources and experts in the field.
Federal officials hope the centre helps to create 25 new businesses in the clean energy sector over the next three years.
Calgary’s mayor said the investment provides both a boost to the city’s efforts to become an energy transition hub as well as its work to revitalize the downtown core.
“We are seeing bold, innovative and collaborative ideas coming forward that are inspired by entrepreneurial Calgarians,” Gondek said. “This will be a catalyst for success in terms of Calgary’s leadership in climate protection and energy transformation, as well as our downtown revitalization.”
From lithium to hydrogen: How Alberta hopes to power the new energy future
According to a study on energy transition released in December, a clean energy sector could create 170,000 jobs and contribute up to $61 billion to the province’s GDP by 2050. However, the study also estimates a path to net zero would need $2.1 billion in annual investments by 2030, increasing to $5.5 billion by 2040.
Although Wednesday’s announcement was encouraging for some experts, there is some belief that policy changes and not just funding will be key to a successful clean energy sector in the province.
“There are ways that governments can use financial tools to provide guarantees that can stimulate a lot more investment to prove out new technologies, and also to make sure that support is structured fairly,” University of Calgary sustainable energy development masters director Sara Hastings-Simon said.
“We’re going to be in a world that looks very different from an energy perspective in just a couple years from now, and so we don’t have a lot of time really left to wait — we really need to be preparing now for that future.”
The investment was also welcomed by Alberta’s opposition NDP, who were also critical of the notable absence of the provincial government during the announcement.
“There is zero investment from the province in this initiative. Why is the UCP ghosting Alberta’s efforts to diversify the economy and promote clean energy?” NDP energy critic Kathleen Ganley said in a statement.
A spokesperson for the Ministry of Jobs, Economy & Innovation said the province wasn’t involved in the announcement because there was no provincial funding for the initiative.
“We remain committed to responsible energy development, reducing emissions and supporting jobs,” Alberta government spokesperson Tricia Velthuizen said in a statement to Global News. “Through innovation and technology, industry can continue to reduce emissions, even with increased oil and gas production.”
Kenney touts energy industry success at Chamber of Commerce speech
According to Vandal, the federal government is looking at projects with Alberta’s provincial government and that both are “aligned on job creation and diversifying the economy.”
“Those consultations and communications are occuring,” Vandal said. “All levels of government need to be on the same page.”
© 2022 Global News, a division of Corus Entertainment Inc.
Ford sees $8.2 billion gain on its investment following Rivian’s IPO – Driving
Ford continues to gain, despite abandoned plans to jointly develop an EV with the startup
Ford Motor Co. expects to record a gain of $8.2 billion in the fourth quarter on its investment in RivianAutomotive Inc. after the electric-truck maker’s blockbuster initial public offering late last year.
The legacy automaker disclosed the gain Tuesday along with several special items it intends to report when Ford releases earnings on Feb. 3. The Dearborn, Michigan-based company will also reclassify a non-cash gain of about $900 million on the Rivian investment from the first quarter of last year as a special item, meaning it will be excluded from the full-year adjusted results, according to a statement.
The disclosures show Ford continues to gain from its connection to the startup even after the auto giant exited Rivian’s board in September and subsequently announced it had abandoned plans to jointly develop an electric vehicle. Ford, which has invested a total of $1.2 billion in Rivian since early 2019, has a 12 per cent stake that the company has said was valued at more than $10 billion in early December.
Rivian delays big battery packs to prioritize more deliveries
Tesla doubles down on accusations rival Rivian stole its battery secrets
Since a November listing that was the largest IPO of 2021, Rivian has been on a roller coaster. The shares peaked at more than $172, but have tumbled 57 per cent since then as the company faced new competition in the electric-vehicle market. Rivian was briefly valued at more than $100 billion, then more valuable than Ford, but Ford has subsequently reclaimed the lead after it topped $100 billion in value for the first time last week.
Ford shares were little changed in after-hours trading Tuesday in New York, while Rivian climbed less than one per cent.
ByteDance reorganizes strategic investment team, causes panic – Yahoo Movies Canada
What a roller coaster day for China’s tech industry. TikTok’s parent company ByteDance has dissolved its strategic investment team, sending worrying messages to other internet giants that have expanded aggressively by investing in other companies.
At the beginning of this year, ByteDance reviewed its “businesses’ needs” and decided to “reduce investments in areas that are not key business focuses,” a company spokesperson said in a statement.
ByteDance isn’t halting external investments outright, though; instead, the investment team will be “restructured” and “integrated across the various business lines to support the growth” of its business.
In other words, some members from its strategic investment team, which has backed 169 companies, according to Chinese startup database IT Juzi (some deals may not be public), will be reassigned roles in other business departments and continue to invest there.
The “restructuring” still stirred up a wave of panic in the industry. China’s cyberspace regulator has drafted new guidelines that will require its “internet behemoths” to get its approval before undertaking any investments or fundraisings, Reuters reported, citing sources. Some Chinese media outlets also reported similar drafted rules.
“Behemoths” refer to any internet platform with more than 100 million users or more than 10 billion yuan ($1.58 billion) in revenue, said Reuters’ sources. That rule, if true, will put a slew of Chinese internet giants, from Tencent, Alibaba, Pinduoduo, JD.com to Baidu, under regulatory review for their investment activities. Tencent in particular is famous for its expansive investment portfolio, which earns it the moniker “the SoftBank of China.”
In a surprising turn, China’s cyberspace regulator said that the “rumored guidelines for internet companies’ IPO, investment and fundraising are untrue.” Furthermore, the authority will “investigate and hold relevant rumormongers responsible in accordance with the law.”
ByteDance’s motive for restructuring may indeed be to generate more synergies between its external investments and internal businesses. We don’t know for sure yet. But there are signs that China’s antitrust action on its internet darlings are nowhere near the end.
Tencent recently sold a great chunk of its shares in two of its most important allies, Chinese online retailer JD.com and Singaporean video games and e-commerce conglomerate Sea. While antitrust pressure wasn’t cited as the cause for its divestments, speculation is rife that China is continuing to blunt the monopolistic power of its largest interent platforms. A handful of them have received various degrees of fines for violating anticompetition rules, but a pause on their investment game will carry much greater consequences. The question now is who’s next.
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