Market Update April 2024
As we were finalizing our latest market update, the recent events in the Middle East brought to light just how quickly the world can change. It's difficult not to feel a sense of heaviness when witnessing so much turmoil on the news.
To feel a mix of concern for global events and uncertainty about your personal financial future is a completely natural response. We also recognize that for some, times like these can make long-term financial considerations seem secondary to more pressing global issues.
We understand that and want to reassure you that our proactive planning ensures that your investments are protected and poised to prosper, even during times of global uncertainty.
Remember, if you have questions or concerns, please reach out. We are here to help navigate these challenges together.
Now, let’s move into our Market Update, where we’ll discuss the latest financial trends and strategic adjustments we’re making to ensure your investments remain secure and resilient in the face of global uncertainties.
Market Update April 2024
Given the market volatility we witnessed in 2022 and 2023, fluctuating interest rates and inflation have understandably been sources of common concern.
In anticipation of a projected decrease in interest rates, we have strategically adjusted our portfolios to emphasize fixed-income investments. This approach is designed to secure income, foster growth, and ensure capital preservation, all while minimizing risk.
Currently, with inflation holding steady at 3%, the Consumer Price Index suggests a potential for further reductions. Consequently, the Bank of Canada is expected to lower interest rates by this summer, although this adjustment is likely to be gradual.
In this environment, lower interest rates typically lead to higher bond prices, making our increased allocation to fixed income a prudent strategy. This positioning is expected to perform well. Furthermore, should interest rates remain steady, you will continue to benefit from the interest payments distributed—either as direct income or reinvested to support the growth of your portfolio.
What's Happening in the Markets
Economic Outlook: There are indications of a potential soft landing, with signs of easing inflation and economic indicators.
Interest Rate Expectations: Anticipation of Federal Reserve interest rate cuts, although our experts foresee a more conservative single cut compared to market expectations.
Fixed Income Attractiveness: Given the economic uncertainties, fixed income assets, particularly longer-duration assets, are emerging as attractive investment opportunities.
How We Are Adapting Your Portfolio to These Changes
Increased Fixed Income Exposure: We have ramped up our allocation to approximately 50% in Bonds, capitalizing on potentially higher interest rates compared to holding cash.
Reduced Risk by Enhancing Diversification: In anticipation of market volatility, we have adjusted your portfolio to include more stable Canadian equities and bonds, aiming to shield your investments from downturns. We will also introduce gold into the portfolios since gold can act as a hedge against inflation and deflation, protecting the portfolio. Gold can also provide financial cover during geopolitical and macroeconomic uncertainty.
Preservation of Capital: Through meticulous research and analysis, we have selected assets with demonstrated stability and consistent income generation to align with your capital preservation goals.
We've carefully tailored our adjustments to ensure your portfolio is well-positioned against the ups and downs of interest rates and inflation. We continue to hold firm to our three pillars of investing: managing risk, preserving capital, and generating steady income.
If you have any questions about these portfolio adjustments or would like to discuss your investments in more detail, please don't hesitate to get in touch.
Canada Budget 2024 - 2025
As you may be aware, the Canadian government recently released the budget for 2024 - 2025.
You can review the full report here.
As always, our commitment to adapting our strategies remains firm in light of these new developments. We will continue to pivot and adjust to ensure that we are maximizing opportunities and effectively meeting your financial needs amidst these changes. Rest assured, we are on top of these updates and are prepared to navigate any impacts they may have on your investments.