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Mr. Calvert says portfolios should be built to withstand different market environments and various risks with some minor adjustments and rebalancing as needed, depending on the client and their investment needs. Also, he believes cash and guaranteed investment certificates may be good for short-term saving needs, but they don’t work for long-term portfolios.
An example is using gold as a hedge. Gold is down 5 per cent this year, as of Nov. 22, which he notes is a better return than the broader bond or U.S. equity markets. iShares Core Canadian Universe Bond Index ETFBy focusing on short-term “factor” trades like inflation, he says investors also risk missing out on longer-term buying opportunities, particularly higher quality companies that have been dragged down by the broader market sell-off.
“Unless you’re really, really good at picking entry and exit points, it makes more sense to continue to build your investment portfolio over the long term with long-term assets and funds that are going to compound at a higher rate of return,” Mr. Mitchell says.