Building or rebalancing your portfolio and wondering what investments to consider next?
Here’s what leading experts featured on BNN Bloomberg say investors should consider adding and dropping from their portfolios today.
Andrew Pyle | Portfolio Manager, Senior Investment Advisor, CIBC Wood Gundy
In your opinion, what single investment should investors own right now — and why?
The materials group has been the worst performer in Canada and elsewhere this month as the risk-off playbook resulted in selling winners like gold and mining stocks to cover losses from other parts of the portfolio.
If anyone thinks that policy sensibility is returning to the U.S. between now and the mid-terms needs to re-watch some Charlie Brown videos. I think the retracement offers up an opportunity to play either gold bullion through an ETF (preferably hedged back to CAD) or via a large-cap Canadian producer.
From your perspective, what is one investment investors should consider dropping from their portfolios — and why?
This isn’t a strong “drop” but more “taking some money off the table”. Exchange Income Fund is sporting a 25 per cent YTD advance, even with the 5.5 per cent pullback this month. Even with its diversified portfolio of companies, it will still be vulnerable to a deterioration in economic conditions with or without higher interest rates. Dividend yield has compressed to below three per cent with the stock’s rise and cash flow growth doesn’t allow for a faster rate of dividend growth to compensate.
Colin White | Chief Executive Officer, Verecan Capital Management
In your opinion, what single investment should investors own right now — and why?
People should be invested in a globally diversified, style diversified, asset class diversified portfolio that is built to withstand the kind of volatility we are seeing now.
Diversification can be thoughtful, leaning away from trends that look over valued can make things more comfortable, but it is dangerous to get too confident and make extreme calls.
Having reliable income and assets in high interest savings accounts to pay for a couple years of expenses will give you the ability to ride out rough patches.
From your perspective, what is one investment investors should consider dropping from their portfolios — and why?
We are never fans of covered call strategies and now is a more dangerous time to hold them.
Covered call ETF’s will give you most of the downside and cap any upside so in volatile markets those weaknesses are exacerbated.
They are positioned as an income vehicle, but they leave you more open to drops in the underlying without the ability to participate in the recovery.
