Exiting a rocky market rather than sticking it out can often lead to worse results for nervous investors, says Jack Delany, quantitative portfolio manager with the multi-asset team at Dublin-based Irish Life Investment Managers.
Delany said the temptation to cut and run can be strong, but markets favour those who dare to stay invested.
“It seems like a really natural response when your portfolio loses value to reduce risk and wait for better times,” he said. “But we know that over the long term, this can be a very costly strategy.”
Speaking on the latest episode of the Soundbites podcast, Delany said investors dig themselves into a hole when they de-risk their portfolio at a cost, and then fail to reap benefits during the subsequent recovery. Rather than pull money out of the market, he suggests investors use risk-mitigation strategies, which he described as the smart investor’s secret weapon.
“These can be either explicit risk-reduction strategies that purchase protection against an underlying asset, or implicit risk-reduction strategies that allocate to more defensive exposures or that dynamically manage exposures at different points in the cycle,” he said. “Both of these approaches, though, can be combined to manage losses and deliver a smoother return profile for investors.”
The most common strategy is also the most powerful: diversification across equities, bond classes, regions and currencies.
Beyond straightforward diversification, he employs other tactics that deliver the potential for both protection in down markets and participation in up markets.
“Examples of useful strategies includes collar option strategies, where we use put options to protect against losses but still leave room for some upside participation; low-volatility equity strategies — long-only equity strategies — that target more defensive, lower-beta, lower-volatility allocations; and finally, tactical allocation strategies,” Delany said. These strategies allow investors “to systematically reduce their equity allocation when the outlook is not favourable or increase it when the outlook improves.”
The most successful investors wouldn’t eliminate systematic risk from their portfolio, even if they could, he said.
“The only way to completely insulate a portfolio from systematic risk is to invest fully in cash, and this is a strategy that simply won’t generate the returns, over the long term, that most investors are looking for,” he said. “Taking a risk is a necessity when it comes to generating returns.”
The trick, he added, is to invest intelligently.
“Robust asset allocation, underpinned by both qualitative and quantitative analysis, goes a long way to deliver that smoother return profile that investors want.”
Delany said the key to the asset allocation process is considering the objective risk constraints of the client and tailoring the design of the portfolio accordingly.
Optimizing the portfolio
“The considerations here can include risk and return, but also liquidity constraints, income requirements, whether the portfolio is being built for pre- or post-retirement investors and so on,” Delany said. “Once these points have been established, we utilize an asset allocation framework that focuses on positioning portfolios to deliver over the long term.”
Emotions will still play a role when markets start to fluctuate, but there are several ways to tame them.
“The key step is education, ensuring that investors are invested in portfolios suited to their risk appetite and that they fully understand the loss potential of their investments,” he said. “Advisors have a key role to play here, sitting down with the client and outlining these considerations.”
He said getting comfortable with market volatility risk and understanding risk tolerances will help reduce “sub-optimal emotional responses” when losses occur.
This article is part of the Soundbites program, sponsored by Canada Life. The article was written without sponsor input.
Paul Holba appointed Chief Investment Officer of Empire Life Investments Inc. – Yahoo Finance
KINGSTON, ON, July 4, 2022 /CNW/ – Empire Life Investments Inc. (ELII) today announced the appointment of Paul Holba, CFA, as Chief Investment Officer. Mr. Holba also joins the executive leadership team of parent company The Empire Life Insurance Company (Empire Life).
Mr. Holba joined Empire Life’s retail distribution division in 2009, bringing with him more than 20 years of experience in the Canadian investment industry through progressively senior roles with global investment management firms and the asset management division of a major Canadian bank. He has held senior management roles in both Empire Life and ELII since then. For the past seven years, he has held the position of Vice-President, Retail Distribution, building strong relationships with and between advisors, investment professionals and strategic partners.
“Paul has deep knowledge of the investment and insurance sectors and has proven himself as a highly respected and engaging leader within the company and the industry,” says Mark Sylvia, President and CEO of Empire Life and ELII. “Under Paul’s leadership, the ELII investment management team will continue its focus on performance through investing in attractively valued, high-quality businesses with an emphasis on downside protection for our customers and institutional investors.”
About Empire Life Investments Inc.
Empire Life Investments Inc. is a wholly owned subsidiary of The Empire Life Insurance Company. The company manages and offers mutual funds and is the portfolio manager of Empire Life segregated funds, including Empire Life Guaranteed Investment Funds.
About Empire Life
Established in 1923 and a subsidiary of E-L Financial Corporation Limited, Empire Life provides individual and group life and health insurance, investment and retirement products. The company’s mission is to make it simple, fast and easy for Canadians to get the products and services they need to build wealth, generate income, and achieve financial security. As of March 31, 2022, Empire Life had total assets under management of $18.6 billion. Follow us on social media @EmpireLife or visit empire.ca for more information.
SOURCE The Empire Life Insurance Company
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/July2022/04/c4634.html
Why ETFs are a good investment value – Yahoo Finance
Exchange-traded funds, or ETFs, can be a good way to diversify your portfolio and can be cost-effective.
“ETFs are generally less costly and easier to access for investors,” said Ben Johnson, Morningstar’s director of global exchange-traded fund research. “They offer investors access to a whole host of investment strategies, from total market indexes to actively managed portfolios of stocks linked to the metaverse, with low fees, superior tax efficiency, and often much smaller investment minimums—typically as low as the price of a single share.”
Here’s what industry experts have to say about how to make ETFs sound investment values.
Johnson notes it’s important to know and respect what the “ET” in ETF stands for. “ETFs trade like stocks, and investors should practice good hygiene when it comes to trading them to avoid running up a big trading cost bill,” he said.
Specifically, Johnson explained that investors should consider using limit orders when buying and selling ETFs.
“This will help to ensure that they get the price they ask for (if not better) and prevent them from transacting at a price they might not like,” he said.
ETFs are fully transparent, said Tom Lydon, vice chairman with VettaFi.
“They frequently update their holdings, so investors know exactly what they are getting themselves into,” he said.
Also, Lydon explained that ETFs are more tax efficient than traditional open-end funds. Due to structural differences, said Lydon, ETFs do not incur a capital gains tax like how mutual funds would, but still come with a capital gains tax upon the sale of the ETF by an investor.
According to Lydon, ETFs may be seen as an improved version of their mutual fund cousins, providing the benefits of mutual funds and then some.
“Some of the key selling points of ETFs beyond traditional open-end funds may include things like lower expense ratios, flexible intraday trading, transparent nature and improved tax efficiency for taxable accounts,” Lydon said.
Finally, unlike mutual funds that are bought and sold once per day after the market closes, ETFs trade all day long.
“If you are familiar with trading individual company stocks on a brokerage platform, then picking up an ETF should be a similar experience,” continued Lydon.
Furthermore, he said more knowledgeable investors may also utilize various trade orders for executing ETF trades, including limit orders and stop-limit orders, along with short selling, to better manage their investment experience.
Salim Manji Acquires 10,000 Shares of Artis Real Estate Investment Trust Unit (TSE:AX.UN) Stock – MarketBeat
Artis Real Estate Investment Trust Unit (TSE:AX.UN – Get Rating) Director Salim Manji bought 10,000 shares of Artis Real Estate Investment Trust Unit stock in a transaction that occurred on Wednesday, June 29th. The shares were acquired at an average price of C$11.65 per share, for a total transaction of C$116,500.00. Following the acquisition, the director now directly owns 2,315,475 shares in the company, valued at approximately C$26,975,283.75.
Shares of AX.UN traded down C$0.02 during midday trading on Friday, hitting C$11.76. The company had a trading volume of 419,951 shares, compared to its average volume of 431,720. The company’s 50 day moving average price is C$12.50 and its 200 day moving average price is C$12.58. The stock has a market cap of C$1.37 billion and a price-to-earnings ratio of 2.76. Artis Real Estate Investment Trust Unit has a 52 week low of C$10.93 and a 52 week high of C$13.76. The company has a quick ratio of 0.05, a current ratio of 0.15 and a debt-to-equity ratio of 79.99.
AX.UN has been the topic of several recent research reports. National Bankshares lifted their target price on shares of Artis Real Estate Investment Trust Unit from C$12.25 to C$12.50 and gave the company a “sector perform” rating in a report on Monday, March 7th. Laurentian Bank of Canada lifted their price target on shares of Artis Real Estate Investment Trust Unit to C$15.00 and gave the stock a “buy” rating in a research note on Monday, March 7th. BMO Capital Markets lifted their price target on shares of Artis Real Estate Investment Trust Unit from C$13.00 to C$14.00 in a research note on Monday, March 7th. Laurentian lifted their price target on shares of Artis Real Estate Investment Trust Unit from C$13.50 to C$15.00 in a research note on Monday, March 7th. Finally, Scotiabank lifted their price target on shares of Artis Real Estate Investment Trust Unit from C$12.75 to C$13.50 in a research note on Tuesday, March 8th. Four investment analysts have rated the stock with a hold rating and one has issued a buy rating to the stock. According to MarketBeat, the company has a consensus rating of “Hold” and a consensus target price of C$13.53.
About Artis Real Estate Investment Trust Unit (Get Rating)
Artis is a diversified Canadian real estate investment trust investing in office, retail and industrial properties. Since 2004, Artis has executed an aggressive but disciplined growth strategy, building a portfolio of commercial properties in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and select markets in the United States.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest and most accurate reporting. This story was reviewed by MarketBeat’s editorial team prior to publication. Please send any questions or comments about this story to firstname.lastname@example.org.
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