Right now we Canucks have our day in the sun, and we could make some varied hay while that sun is shining. I like to call it “repairing portfolio holes”.
Of course, what it takes to address portfolio weaknesses is unique to each investor. We all have different strengths and different portfolio holes or portfolio potholes. The bottom line is that we want to make sure that we invest within our own risk tolerance. And then we want to make sure that we encourage geographic diversification and asset diversification.
I asked Arthur Salzer of Northland Wealth Management where an investor could find opportunities. Northland is a award-winning family office. They manage money and assets for wealthier individuals and families in Canada and around the world. And, according to Salzer, families are overweight Canadian stocks in the 20% range. (If you need an investigation, you may contact a service fee advisor.)
Canadian stocks are on the way up thanks largely to the financial, natural resources and mining sectors. They offer more value compared to US markets, which have performed better for more than a decade.
In their search for more value, Salzer moved customers into more things equilibrium US equity fundscompared to the cap-weighted S&P 500.
According to Salzer, 7.5% to 10% families are Canadian real estate and, given the sharp rise in the Canadian dollar, might consider currency hedging if possible.
Yves Rebetez from Credo advice is not a fan of bonds these days, aside from emerging market bonds. And in the portfolio he says: “I think the discussion about Canadians and holes stems from sector overweights, exposure, wider value ranges and small caps elsewhere, as well as other factors like momentum and quality.”
He would also add gold to the list of compensation options. I agree on gold there and add raw materials. Emerging market stocks could also be a good idea.