Get Over Market Fears
It’s a new world for investors – fixed income securities are now seen as being riskier than stocks.
If you’re sitting on a lot of cash, invest some of it in fixed-income securities for the short term.
Even if you’re older, give a higher portfolio weighting to stocks than to bonds.
Lighten up on Canadian stocks and focus on the U.S.
Those are some of the recommendations being made to investors and financial advisers by Gaelen Morphet, senior vice-president and chief investment officer for Empire Life Investments.
Empire Life has been in the segregated fund business for years but recently launched a line of mutual funds in what CEO Drew Wallace describes as “a natural extension of our business”. The company has more than $11 billion in assets under management.
A lot of that money is in foreign stocks at present. “We have by far the highest exposure to non-domestic equities that I have ever had in my career,” Ms. Morphet said.
The lion’s share of those assets is invested in the U.S., which she feels offers much greater opportunities than Canada at present.
“It’s not that we’re negative on Canada – we feel some segments offer good value, such as the banks. But we believe there are better opportunities elsewhere, especially in the U.S.,” she said.
She is less bullish on Europe, noting that there is still the potential for fiscal and economic crises which could knock back the markets.
Other top holdings in her company’s American Value Fund include Pfizer, IBM, Viacom, Honeywell, Johnson & Johnson, and General Electric.
Ms. Morphet acknowledges that many investors are still fearful of the stock market, remembering what happened in 2008-09, and are more comfortable in fixed-income securities. Her message to them: Get over it.
“Despite the gains of the past couple of years, I believe the U.S. market is still fairly valued and I’m not concerned about another crash,” she said. “We see more risk in fixed income than in equities.”