Video - In 2017, active management can make a difference
In this webcast - In 2017, active management can make a difference : with our expert Michel Doucet.
SUBJECT: Active management
EXPERTS : Michel Doucet
Note: The information in brackets "[...]" describes the visual and audio content of the video other than the dialogue or the narration.
[Jinggle music begins. The title ‘’Market Trends’’ appears in a honeycomb cell, then replaced by the video’s title: In 2017, active management can make a difference – March 2017. It all gives way to the Desjardins Securities logo. These images give way to Mr. Michel Doucet in an office. Behind him, we can see computer screens with stock quotes].
Michel Doucet (B. Sc., CIM®, Vice-President and Portfolio Manager, Portfolio Advisory Group)
Since November, north american stock markets are going from record to record. Easily one could find that this rally is Trump related. Yes, but one should not under estimate the full force of the economic momentum in the U.S.
Trump’s fiscal and budget proposals, if they are approved by the House and Congress, will add fuel to an already burning fire. For the stock market, lower corporate taxes and the special tax on offshore cash will be very bullish going forward if they are adopted.
What’s bullish for stocks is also bearish for bonds. For the first time since 2008, the U.S. economy will be fueled by the full force of monetary, budgetary and fiscal policies. This is bound to add fuel to a burning fire. Thus, generating inflationary pressures and forcing the hand of investors to review their inflation forecast. All in all, economic wise, this backdrop is bullish for the economy and will tilt the hand of the Fed with regards to its monetary policy.
After more than 30 years, the bond market will shift from bull to bear. Although Canada’s economic backdrop is more nuanced than in the States, our bond market will be influenced by unfolding events south of the border. Joined to the hip, the Canadian bond market will follow US bonds where they go.
For investors, this change in trend will have an impact on portfolio returns in 2017. Since 1956, it’s noteworthy to remember that bonds have generated returns of some 8%. Such returns in bonds have contributed to generate the overall return of a 50/50 portfolio to more than 9% annually since 1956.
Going forward, it will be no easy task to generate a 5% plus return in a 50/50 portfolio without the helping hands of bonds. Supposing a 7% return for stocks, this translates into a 3.5% in a 50/50 portfolio. This is where active management can make a difference. 2017 will tilt the hand of investors in actively managing their country, sector and style mix with regard to stocks. 2017 also rimes with prudence with regards to bonds. Investors will want to favor short term bonds and a low exposure to duration.
Inertia is not an option in 2017! Until next time, active management is your friend!
[The music begins again. The firm's logo and the following notice appear on the screen: « This presentation is given for general information purposes. Desjardins Securities will not be held responsible for errors or omissions in the presentation. The information in this presentation should not be construed as legal, financial, accounting or tax advice. Desjardins Securities strongly recommends that you consult experts in those fields if necessary. Desjardins Securities and its directors, managers, employees and agents will not be held responsible for damages, losses or fees resulting from the use of information contained in this presentation. This presentation may contain statistical data cited from third-party sources believed to be reliable, but Desjardins Securities does not represent that any such third party statistical information is accurate or complete, and it should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this publication and are subject to change without notice. Desjardins Wealth Management Securities is a trade name used by Desjardins Securities Inc. Desjardins Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada ( IIROC ) and the Canadian Investor Protection Fund (CIPF). ». Then the logo gives way to the dsia.ca website address. End of the video. ]