In recent days and months markets around the globe have been undoubtedly volatile. One client told me that unlike the August turbulence this feels more serious. The recent Royal Bank of Scotland report added gasoline to this sentiment by recommending that people sell all of their holdings and purchase government bonds.
The reasons for the market turbulence include the a) recent Fed interest rate hike, b) slowing of the Chinese economy and c) oil price decline. If you would like further background on the causes please click here.
Positive Proactive Activity in your Portfolios
Your portfolios may appear static, however, within them proactive decisions are being made to mitigate risk and take advantage of opportunities. CI Investment Consulting, who oversee Portfolio Series, Portfolio Select Series, *Evolution, and **Assante Private Client, strive to moderate the fluctuations in your portfolio. They do this by actively managing the asset mix, currency risk and by adjusting the weighting or even by replacing the portfolio managers who manage your portfolio. The portfolio managers themselves make decisions on the individual securities to own. Importantly, they all look forward when making decisions rather than relying on historical data to forecast the future.
Their objective is to provide you with a stable investment experience and help avoid the cycle of emotions that come with large fluctuations (both on the positive and negative side). The chart below highlights how most asset classes grew and then rapidly declined in 2015. Using the *Evolution 40% Income / 60% equity as a proxy portfolio we see active management at its best. It rose by 6.90% in the first half of the year and then declined by 1.70% netting the investor 5% after fees. Other individual asset classes were much more extreme.
In times like this it is important to acknowledge the anxious feelings that can sometimes arise but we need to remind ourselves of the work we did in designing the portfolio and how it fits in with your overall plan. You are in good hands.
Bryan
*Evolution Private Managed Accounts are managed by CI Investments Inc. (“CI”). Commissions, trailing commissions, management fees, and expenses may all be associated with mutual fund investments in Evolution Private Managed Accounts and the use of Asset Management Service. The indicated rates of return are the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions/dividends. They do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus and consult your Assante Advisor before investing. Assante is an indirect, wholly-owned subsidiary of CI Financial Corp. (“CI”). The principal business of CI is the management, marketing, distribution and administration of mutual funds, segregated funds and other fee-earning investment products for Canadian investors through its wholly-owned subsidiary CI Investments Inc. If you invest in CI products, CI will, through its ownership of subsidiaries, earn ongoing asset management fees in accordance with applicable prospectus or other offering documents.
**Assante Private Client is a division of CI Private Counsel LP.
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances.
January 20, 2016
