There is lots going on in the world as we head into the US Thanksgiving holiday.
You may ask why we focus so much on the global situation (and a lot about what is going on in the US) and not so much on Canada when we discuss the global economy and financial markets in this blog.
We do live in Canada so we do have to focus on personal financial matters from a wealth management perspective and we do have a reasonably high degree of regard for the Bank Of Canada (so we do listen and follow their perspective), but we invest globally and a good portion of the diversification that we suggest includes monitoring all that is happening in the world.
Our global equity benchmark is the MSCI All Country World (ACWI) Index:
A few years ago it was made quite clear to me that Canadian Investors who owned equities had close to 70% of their investment portfolios tied up in Canadian equities (referred to as "home country" bias).
From a global and diversified perspective, the index suggests
about 3% should be Canadian.
With the under-performance of Canadian equity markets over the last year (S&P TSX is lower by over 8%, year to date) the broadly diversified portfolio has proven extremely effective.
The US equity market is better by approx. 2% so far this year (in comparison) and the ACWI is better by 1.3%.
Of course, our objective in managing our client's money is to beat the benchmark index (over longer time frames).
As I often say, different asset classes perform differently at different times in the economic cycle. It is rarely clear as to the future timing on this, (see last Fridays blog and previous blogs on the success of economists and analysts predictions: not very good), so it is best to be exposed to multiple asset classes and use re-balancing to take profits when an asset class's growth takes it to an over-weight position in a portfolio.
More on what is going on in the world tomorrow on our weekly webinar.
The recorded version will be posted on our website at or about 5pm.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist