Any time is a good time to review and optimize your investment portfolio. This especially rings true in our current economic environment, where trends are beginning to emerge that have the potential to shift markets. To help investors learn more about these potential market movers and what they can do to prepare their portfolios, the Financial Post recently spoke with Sightline Wealth Management Senior Investment Advisor Katherine Gordon for insight.
One of the emerging trends for 2022 is inflation and the multiple rate hikes that have been eluded by the Federal Reserve to tame it. “Investors are somewhat cautious as central banks switch gears from a low-interest rate policy,” she explains. “Yet government bonds aren’t providing them with a safe haven. With U.S. inflation currently running at about 7 percent and 30-year U.S. bonds at a little under 2 percent, fixed income investors would be losing 5 percent of their purchasing power.”
In addition to inflation and potential rate hikes, Gordon believes a slowing Canadian economy and a downturn in consumer confidence are also poised to impact portfolios. “In an inflationary environment, consumers typically want to buy today to avoid price increases tomorrow. But that has had an effect on consumer sentiment. We haven’t seen this combination of events in the economy in many generations,” says Gordon.
The last trend that has come to the forefront this year is the increase of investments in green equities. While it is certainly a positive thing that investors are striving to make their portfolios more environmentally responsible, this influx has caused the green sector to become overvalued. As a result, Gordon says that investors may need to be selective with their green investments if they hope to achieve healthy returns.
Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). Sightline provides management and investment advisory services to high-net-worth individuals and institutional investors primarily through fee-based accounts.
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