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2020 Investment Expectations

“Markets Do A 360 Turn Around"

After a dismal December and finish for 2018…the USA and Canadian markets did a 360 in 2019 generating record breaking returns. So much for timing the markets!

 

Thanks to three interest rate cuts by the USA Federal Bank and more Quantitative Easing the longest Bull market in history remains intact.

 

Nonetheless, I do remain cautious and still recommend that clients position their asset allocation in a conservative manner with 60% of their holdings to be invested in GIC’s with British Columbia Credit Unions.  The current one year rate is now offered at 2.25% and 2.30% for three year deposits.

 

The current strategic thinking has now moved from a Recession scenario to a new slow growth Global recovery.  Based on this theory I believe clients should be open to a “Barbell Approach”, one end of the Barbell should be extra conservative (i.e. GIC’s) and the other side should take advantage of more cyclical sectors as Energy, Industrials, Financials and Materials all of which can be found in Canadian Dividend Funds.

 

 

 

 

 

 

 

 

Energy, Industrials, Financials & Materials 40%

GIC'S

60%

For example, in 2019 the Industrial Alliance Canadian Dividend Growth Fund earned 18.08% Net after all management expenses and fees.  This rate combined with a Guaranteed GIC would have provided a high single digit return with a reasonable downside risk in 2019.  I believe this is a sensible strategic approach for 2020.  Of course each client’s risk tolerance must be considered at all times.  This is just one area where a qualified Advisor can be crucial to your long term investment results.

 

*In 2019 Industrial Alliance Financial along with other companies introduced new Indexia type funds with lowered management fees.  Many of my clients chose to take advantage of these funds as they performed admirably.

Recommended

2020 Asset Allocations For Retired Clients

Investment Vehicle    % Holdings      Risk Tolerance/Strategy

Credit Union GICs                 60%              Very Conservative Growth

Canadian Dividend Fund      20%                      Growth

Real Estate Income               15%               Moderate  Growth

Global Health Care                 5%                        Growth

Total Asset Allocation          100%          Conservative/Moderate Growth

PERFORMANCE 2019

FUNDS                                                   1YR                   3YR                   5YR                  10YR 

Canadian Diversified Fund                 11.53                2.99                   3.27                  4.40

Canadian Dividend Fund                    18.08                5.07                   5.42                  6.37

USA Dividend Fund                              19.31                6.22                  7.46                   9.04

Global Equity Fund                                 7.40                4.50                  5.90                  7.28

Global Heath Care                                16.37                8.93                  7.81                13.26

Asia Pacific Fund                                   26.12              12.03                  7.24                  6.79

Real Estate Fund                                   16.67                7.85                  6.75                  8.48

 

Guaranteed GIC's                               1YR                  3RY                  5YR

BC Credit Union                                    2.25                 2.30                  2.45 (Non-Redeemable)

BC Credit Union                                         1.00      (Redeemable after 30 days)

 

*Allocation formula using age 100 minus your current age is a simple but effective formula for many of my clients:  i.e.

Age 100 minus current age 50 equals 50% allocation to stocks.

Age 100 minus current age 65 equals 35% allocation to stocks

Age 100 minus current age 75 equals 25% allocation to stocks

 

Segfunds which have a 75% Guarantee at Maturity have lower Management Fees compared to Segunds offering a 100% Maturity and Death Guarantee. It is important that each client has their Asset Allocation designed to match their individual Risk Tolerance i.e. Conservative, Moderate, Aggressive.

Rick Reynolds CLU CH.F.C. PRESIDENT

 

Contact Us:

Please contact us if you have questions

or would like us to prepare a custom service

package based on your needs.

 

 

Tel : (250) 881-2423

email: info@rerinvest.ca

Victoria Office, 670 Newport Ave

Victoria, BC  V8S 5C7

 

North island Office, 3713 Shoreline Drive,

Campbell River, B.C. V9H 1L8

R. E. Reynolds Investments

& INSURANCE SERVICES LTD.

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