Wow – 2020 will be a year we won’t easily forget!

The worst pandemic in a hundred years has tossed more than 100 million people out of work, exposed serious societal inequities (especially in the hard-hit United States), and has caused deep-seated racial tensions to rise emotionally to the surface again. Now the bitterly partisan political battle in the US is hitting new highs – or lows, depending on your viewpoint – with less than a month to go before what many are predicting could be another very close Presidential election.

Positively for investment markets, central banks and governments have been extremely proactive and have provided trillions of dollars of stimulus to help those who are struggling financially and to keep the economy and businesses going.

In times like these, it is crucial to have a clear investment process that blocks out the noise, to focus on portfolio opportunities that provide good long-term upside potential while maintaining an acceptable level of volatility for each investor. Our key considerations include:

  • Equities have provided a solid return over the long run, but the cost is short-term volatility
  • With interest rates near zero, most people need some exposure to equities for higher return potential, or else they may deplete their savings too quickly
  • Not everyone can stomach the volatility that comes with a pure growth, or all-equity portfolio
  • Not everyone needs to aim for a high rate of return to meet all their goals
  • That is why we manage to several model portfolios – to offer our clients a choice that fits

One of our top goals is to provide peace of mind for all our clients. The portfolio model they select is a major contributor.

In the spring, we were encouraged to see how our Enhanced Global Equity Pool held up through the initial COVID turmoil. We recognized that we could use the same option strategy with an income pool to further protect our more conservative clients.

As a result, we will be launching our Low Volatility Yield Pool in the next couple of weeks. As we do with our Enhanced Global Equity Pool, we will be employing the Low Volatility Yield Pool in our model portfolios to provide a more comfortable balance between risk and reward.

With the uncertainty in markets this year, now is a good time to reflect on what type of investor you are. Here is a visual representation of the pools we have built and what we are trying to achieve with them.

Which of these “lines” would you be most comfortable with?

  • Some will be drawn to the higher long term returns of an all-equity portfolio (the blue line)
  • Others will prefer the lower volatility of an income portfolio (the green line)
  • Many will lean toward a blend of the two approaches

The key is to start with a Financial Plan that can help you understand your choices. Once you articulate the lifestyle you desire, you can see how your money needs to grow to support that vision. Then, based on your comfort with risk and return, we can help you determine the best investment strategy to achieve your goals.

Stay safe and healthy!

Past performance is no guarantee of future results. Returns for the Elevate Enhanced Low Volatility Model and Elevate Enhanced Global Equity Model are presented gross of Management Fees.

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