Maestro vs Markets: key learnings from the Market UpdateSubmitted by Agrawal Associates on January 27th, 2017
February 1, 2017
Insight on the 2016 market, expectations for 2017 and the new Maestro portfolios were key agenda items at a recent presentation to clients and guests of Agrawal Associates.
An authority on asset allocation strategies and the mastermind behind the Maestro portfolios, Mr. Les Grober, Senior Vice President at Investors Group, joined Mr. Girish Agrawal for the January market update.
Mr. Les Grober
The presentation outlined how 2016 was a year of fluctuating markets with some investments performing well while others were disappointing. While it was a good year on average for equity investments, fixed income investment performance was lackluster in comparison.
For investors concerned about how to balance between equity and fixed income in 2017, Mr. Grober referred back to the powerful philosophies of asset allocation. He asked investors to understand fluctuations and to take advantage when the market diverges from basic principles. Mr. Grober also cautioned against taking risks in a jubilant market when optimism is not justified. It’s important for investors to understand their goals and communicate them to their advisors.
Politics and Investing
Bullish investors at the beginning of 2017 have reacted quickly and drastically to international politics by skewing their portfolios much stronger for equity versus bonds. Mr. Grober noted that this excessive volume of optimism is within a volatile environment. Experts are still unsure how the fiscal policies of the new United States administration will impact International and Canadian markets.
Mr. Grober predicted that income and earnings growth will step-up in 2017. He anticipates the difference between equity and fixed income will narrow this year, and recommends investors rebalance their portfolios to take advantage of opportunities.
The greatest challenge for fixed income currently is very low interest rates, and high returns are not realistic. Mr. Grober advises conservative investors focus on developed markets rather than the more volatile emerging markets. Additionally, he reiterated the importance of diversification — including opportunities outside of Canada.
Market Update 2017
The Maestro portfolios
The presentation also offered insights on Maestro portfolios, which are designed to get a reasonable of return by placing proper emphasis on equity and fixed income. “Maestro portfolios are purposefully designed to address low returns,” explained Mr. Grober.
The use of low-volatility equity reduces fluctuation, while still showing positive growth. The blue line in the graph below keeps up with the broader averages over several cycles of economic growth, without drastic spikes. Three Maestro portfolios address different investor goals: Income Balanced, Balanced, and Growth Focused. Each of these portfolios have the ability to vary from target asset mix by +/- 15%.
To conclude the Market Update, Mr. Agrawal reminded his clients of the importance of looking at the interrelated ten areas of your financial life, rather than exclusively on portfolio management. Important recommendations for success include:
- Avoid temptation and make informed decisions
- Use professional investment management
- Follow the prudent principles of wealth management
- Use a holistic, integrated financial strategy
For more information about upcoming Agrawal Associates events, please visit Upcoming Events
Mr. Girish Agrawal