The best long-haul RRSP investments from three veteran money managers – The Globe and Mail
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How registered retirement savings plans (RRSPs) will be affected decades from now by an escalating global military buildup or higher interest rates are probably the last things investors are thinking about as they rush to make a contribution before the March 1 deadline.
But beyond that tax refund in the spring, the long-term investments inside RRSPs ultimately determine how people live in retirement.
Unlike non-registered investment accounts or tax-free savings accounts (TFSAs), the ability to defer taxation to retirement through an RRSP provides an incentive to invest over several decades.
That means choosing the right mix of investments that grow over time is paramount. Globe Advisor spoke with three veteran money managers about their best long-haul RRSP investment picks.
Diana Avigdor, head of trading, Barometer Capital Management Inc. in Toronto
Hikes in interest rates of 425 basis points since early last year is a game-changer for money managers like Ms. Avigdor because clients now have the option of shifting assets into bonds and other fixed income with safe and worthwhile yields that can compound over time.
However, she cautions that real returns could be stemmed by inflation and likes investment-grade corporate bonds for higher yields with a lower level of risk for younger investors. She points to iShares iBoxx $ High Yield Corporate Bond ETF HYG-A as an option to diversify risk.
“What COVID-19 has created is a situation in which [corporate] savings and balance sheets are pretty healthy, unlike in 2008, when they were levered and there was a crisis,” she says.
On the equity side of a portfolio, she prefers a split between passive and active management. Her passive pick – nicknamed “spider” – is SPDR S&P 500 ETF Trust SPY-A, the benchmark for global stocks.
“You could just leave [a spider] in your RRSP for 20 or 30 years,” she says. “When you look at the law of averages, it’s on your side. There’s never been a 20-year return in the S&P 500 that was negative.”
Ms. Avigdor stresses the importance of an actively managed component – even if that means paying management fees either directly to an advisor or through a mutual fund.
“Your return is 80 per cent determined by sector allocation,” she says.
One specific long-haul stock she likes for RRSPs is global defence manufacturer Lockheed Martin Corp. LMT-N. She expects the company to lead the sector as the world moves away from globalization toward sovereign independence.
“Defence budgets have grown and are growing, and I expect them to stay stable relative to [gross domestic product] and not go down over the next two decades as we move away from globalization,” she says.
“The world is dangerous, and these guys have long-term contracts.”
John Zechner, chairman and lead equity manager, J. Zechner & Associates Inc. in Toronto
On a similar geopolitical theme, Mr. Zechner points to the global semiconductor supply crunch during the pandemic and China’s recent acts of aggression toward Taiwan – home to the world’s largest producer, Taiwan Semiconductor Manufacturing Co. Ltd. TSM-N.
To avoid one-company risk, he likes VanEck Semiconductor ETF SMH-Q, which also holds Nvidia Corp. NVDA-Q, Broadcom Inc. AVGO-Q, and Texas Instruments Inc. TXN-Q.
“Semi[conductor]s are the new industrial growth engine. You want to have your finger in there even though it’s a little cyclical,” he says, adding that buying the entire semiconductor market-weighted index is a great way to ensure holding the dominant players.
“It rebalances automatically to market weight, so you don’t get stuck with a dog like Intel that used to be the second- or third-biggest holding.”
Mr. Zechner says the same strategy for investing in the sector-leading companies of tomorrow can apply to other subsectors including biotechnology through iShares Biotechnology ETF IBB-Q or SPDR S&P Biotech ETF XBI-A.
“You don’t have to buy them actively. They will find their way in because it’s part of the index,” he says.
Another long-haul RRSP investment that tops Mr. Zechner’s list is a staple in most Canadian retirement portfolios – the big Canadian banks.
They earned their chops as profitable beacons of stability during the 2008 global financial crisis, have consistently risen in value over time, and have never reduced a dividend payout since Confederation.
Mr. Zechner likes Bank of Montreal BMO-T, Canadian Imperial Bank of Commerce CM-T and Bank of Nova Scotia BNS-T but says the best bangs-for-the-buck right now are Toronto-Dominion Bank TD-T and Royal Bank of Canada RY-T.
“They have the least risk in terms of their overall portfolio and size, have more U.S. growth, and the valuation multiples have compressed,” he says.
Allan Small, senior investment advisor, Allan Small Financial Group, iA Private Wealth, in Toronto
You would be hard-pressed to find a Canadian money manager who doesn’t like the big Canadian banks for the long haul. Mr. Small goes further by adding big global banks to the mix for diversification.
“If you want to own something for the next 20 years, you can own a couple of Canadian banks mixed in with a couple of U.S. banks,” he says.
“If you’re looking more at yield, growth and income, you go with the big Canadian banks. If you want more growth, you go with big U.S. banks like Bank of America Corp., Wells Fargo & Co. or Citibank NA.”
Mr. Small also sees long-term bargains in large technology stocks, which lost more than one-quarter of their market value last year as interest rates increased.
“Big-cap tech today makes sense because of the selloff we experienced in 2022,” he says. “A lot of big cap names are on sale for half their value such as Amazon.com Inc. AMZN-Q, Alphabet Inc. GOOGL-Q, or Microsoft Corp. MSFT-Q.”
Mr. Small’s final long-haul RRSP investment is more of a strategy shift for mature portfolios that might have outgrown mutual funds and their sometimes hefty fees.
“If you have a large enough portfolio in which you can build your own mutual fund out of individual stocks, pay your advisor a flat fee for managing the portfolio,” he says.
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Lefebvre announces new committee to help spur investment
A new committee of Greater Sudbury city council is being set up to find the “best way of streamlining and of encouraging investment in Sudbury.”
So described Mayor Paul Lefebvre, who used Thursday’s Fireside Chat event with the Northeastern Ontario Construction Association to announce the new five-member committee.
“It’s a big exercise, but I think it’s a positive way of affecting change,” he told Sudbury.com after delivering his address at Verdicchio Ristorante, adding that his goal is for the committee to present recommended changes to municipal bylaws by the end of the year.
The committee would host five to seven meetings this year to learn from local industry leaders, with priority given to those with experience working for other municipalities.
“What is going on elsewhere?” Lefebvre asked. “How are they doing things different from what’s going on here, and why is that the case, so we have a better understanding.”
Lefebvre said that with many regulations provincially mandated, he wants the committee to narrow in on what the municipality can actually accomplish.
In concert with the committee’s work, Lefebvre said an internal team at city hall will work with their counterparts in other municipalities to dig out best practices for Greater Sudbury to adopt.
Reflecting on Lefebvre’s address, Northeastern Ontario Construction Association executive director Mark Kivinen told Sudbury.com he is “very optimistic,” and that Lefebvre has “hit the ground running” since he was elected to head city council on Oct. 24, 2022.
“He is so engaged with the community and understands what the community wants and needs, and also has the ability to not stay stagnant, to open up and don’t be just locked in your little bubble,” Kivinen said, adding that the upcoming committee should aid in this effort.
“There are other municipalities that are doing things better than us, and we are doing some things better than them,” he said. “I think we understand now that if we’re going to promote growth, we’ve got to open up the city a little more.”
Thursday night’s speech and subsequent question and answer period highlighted an ongoing concern within the local construction industry of so-called “red tape” at city hall, which Lefebvre said city council’s upcoming committee will strive to suss out.
Ward 5 Coun. Mike Parent has also addressed “red tape” in a motion greenlit by city council in February, which will see the city partner with the Greater Sudbury Chamber of Commerce to investigate ways of streamlining processes for businesses.
During his speech, Lefebvre cited recent progress on the Employment Land Strategy and a $1.25-million interim fix approved for Fielding Road, which services one of the city’s industrial hubs, as recent signs of city council support for tackling economic growth.
“We’re serious about this,” Lefebvre said, adding that the work on Fielding Road is a solid investment that will help ensure clients and those working in the area won’t have to wear a mouthguard while navigating the pothole-filled road.
Earlier this week, city council approved a public consultation plan for a new tax incentive called the Employment Land Community Improvement Plan, which Lefebvre cited as another recent move toward spurring economic activity. Sudbury.com will be publishing an in-depth report on the proposal soon.
Tapping into the value-added market when it comes to battery-electric vehicles, the city’s infrastructure deficit, its collection of aging facilities, a need for housing across the continuum, and a need for employees in a local economy in which there are approximately 3,500 unfilled jobs right now, were also hot topics during tonight’s speaking engagement.
Lefebvre said all of these issues and more will need to be dealt with to help meet his ultimate goal of increasing Greater Sudbury’s population to 200,000 within 20 years.
Tyler Clarke covers city hall and political affairs for Sudbury.com.
Investment opportunities in precious metals: Three hot picks from David McAlvany
The Canadian Press
Gold breaking above 2000 is likely a 2023 event: CEO
VIDEO SIGN OUT
The precious metals sector could stand to benefit from renewed exploration, particularly at a time when investors are undervaluing several companies within the space, one financial expert says.
In a Thursday interview with BNN Bloomberg’s Amber Kanwar, David McAlvany, chief executive officer of McAlvany Financial Companies, said precious metals companies that specialize in mining commodities such as gold and silver are well-positioned to capture new growth through exploration, and are showing sustainable cost production.
He recommended Orla Mining Ltd. (ORLA), I-80 Gold Corp. (IAU) and MAG Silver Corp. (MAG) as his top picks in the precious metals sector.
McAlvany, his family and his firm own shares of all three companies mentioned above, however his investment banking clients do not.
Check out the full video at the top of the article to learn more.
BRAVO READY Announces Strategic Investment From Magic Eden
MONTREAL, Québec — BRAVO READY, creator of BR1: INFINITE, the world’s first pay to spawn, kill to earn shooting game, today announced a new strategic investment from Magic Eden, adding to its expanding list of investors, which includes Krafton (owners of PUBG), 6th Man Ventures, and Solana Ventures. The funding provided by this investment will be directed towards the further development and mass adoption of BR1: INFINITE.
“With the support of Magic Eden, BRAVO READY is now better positioned to provide liquidity to gamers,” said CEO and Co-Founder, Evan Ryer. “Delivering innovative and exciting gameplay experiences that leverage a risk-based model is what keeps players coming back – we are excited to keep onboarding strategic partners like Magic Eden.”
“We are excited to support BRAVO READY and their vision to bring intense competitive gameplay to Web3.” said Chris Akhavan, Chief Gaming Officer, Magic Eden. “We believe the combination of Web3 technology and skill-based player economics will create thrilling experiences for gamers.”
About BRAVO READY
BRAVO READY is a Montreal-based game publisher. In addition to producing AAA and WebGL titles like BR1:INFINITE & Mini Arena, BRAVO READY offers a range of products & services to help align games and game companies for success.
About Magic Eden
Magic Eden is the leading cross-chain NFT platform driving the next billion users to web3. Led by former crypto, tech, and hospitality leaders, Magic Eden is building a user-friendly platform powered by market-leading minting and trading solutions. Magic Eden brings dynamic cultural moments onto the blockchain, empowering users across thousands of digital communities to create, discover and collect unique NFTs. For more information, please visit www.magiceden.io
View source version on businesswire.com: https://www.businesswire.com/news/home/20230330005710/en/
Corey Herscu for BRAVO READY
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