Staying on the right track
By Alfred Lam, CFA
Senior Vice-President and Chief Investment Officer, Multi-Asset Management
Stock markets were incredibly calm in 2017 with low volatility and few down days. This year has been different. Global markets corrected in February and have been weak since, with the exception of the U.S. market. Emerging markets, as represented by the MSCI Emerging Markets Index, have fallen approximately 18% from their peak in January. Several emerging economies are entering recession.
Market leadership has been concentrated in consumer technology (Apple), e-commerce (Amazon) and cloud services (Microsoft) leading market growth in the third quarter. To put this concentration in perspective, Apple’s contribution to the S&P 500 Index return was more than the combined contribution of all companies in the following seven sectors: financials, consumer staples, energy, utilities, real estate, materials and telecommunications. Investors who did not own Apple stock or owned less than Apple’s average weight in the S&P 500 Index (4.2%) missed out on the growth.
In our view, the risk of volatility is increasing. Our portfolios are not only positioned to optimize returns, they are also built to weather volatility. We regularly review our portfolios and make enhancements when opportunities arise. After a recent review, we are enhancing our portfolios in two ways.
Read more about how Assante is enhancing their portfolios here >>October 2018