One of our biggest complaints about the Canadian investment industry is that it is still heavily influenced by inherent behavioural flaws such as encouraging benchmark chasing based on the performance of the hottest segment of the market.
Investment
Markets keeping you up? Try this different goals-based investing approach
Obviously, the higher the target return, the larger the width of this distribution curve — after all, there is no such thing as a free lunch — but it should be less variable than owning the broader market for equity investors or a traditional 60/40 portfolio for balanced investors.
The point is one must be completely agnostic about investing styles, such as value versus growth, new world (technology) versus old world (energy and commodities), and bonds versus stocks. Instead, the focus is on achieving these target returns while minimizing portfolio risk as much as possible.
For example, our overweight in 20-year Treasuries really helped offer material downside protection during the March 2020 meltdown, and our replacement of this 10-to-15-per-cent weighting with energy positions did the same this year.
We have also taken down our fixed-income exposure to the lowest allowable levels and replaced it with structured notes instead of going into more volatile equities or, worse, illiquid privates.
For example, last week we underwrote a five-year note with the Bank of Montreal on Canadian Natural Resources Ltd., Enbridge Inc., Keyera Corp., Pembina Pipeline Corp. and TC Pipelines LP that if in 12 months these stocks collectively have risen above zero per cent, it will be bought back and closed out, but with a 17.5-per-cent coupon. If not, it will roll over to year two where it will pay a 35-per-cent coupon and close out if these stocks collectively have risen above zero per cent.
The totality of our goals-based strategies has resulted in our internal balanced fund protecting against all the downside in this year’s correction, while most of our peers were down more than 10 per cent. Over the past five years, our fund has been able to achieve its annualized goals-based target of five to seven per cent while our peers struggled to post an annualized 3.5 per cent.
Instead, it might be better to step away from all this bother and get a good sleep at night, knowing your goals are not dependent on near-term market moves or, worse, what everyone else is doing.
Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc, operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning.
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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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