Investors bore witness to one of the greatest recessions on
record in 2009 and one’s faith in the financial system was shaken to the core.
But as the saying goes, there is a light at the end of the tunnel. The recovery
has been slow, but the ongoing rise in share prices and the sales and profits
generated by the underlying companies demonstrates their resilience, and
importance of including US equities in equity portfolios. Those who were quick
to pass judgement and wrote off the United States during the last financial
crisis missed out badly on the subsequent recovery. But will that this
bull-market recovery have legs or just horns? While only time will tell, it’s
worth looking at US equities and their role in your portfolio.
The US economy faced some very large challenges but made great
strides to overcome them. US investments still offer significant long-term
benefits to Canadian investors, and the Compass Portfolio Series is an
excellent way to invest in our neighbour and largest trading partner. A
properly constructed portfolio with the proper allocation to US equities harnesses
the growth potential of the world’s largest market but also maintains an appropriate
Big by Every
The US is the world’s largest economy and one of its most
dynamic, too. The same goes for its stock market, which is easily the world’s
largest and offers the most diverse array of companies. Many of the world’s leading
multinational corporations are also US-based and investments in them thereby
provide exposure to global economic growth.
The US is also a world leader in stock market regulation and
corporate disclosure and its individual stock exchanges — mainly the New York
Stock Exchange and Nasdaq — lead in trading volume.
The broader composition of the US market is especially
important for Canadians since our stock market is heavily concentrated in just
three sectors: financial services, energy, and raw materials. We have little to
choose from in such areas as health care, technology, consumer goods, and
Investing in the US through Compass offers many advantages:
selection. Picking winning investments from the thousands of listed companies
in the US is no easy task. Professional investment managers have access to vast
research resources and rely on proven, disciplined approaches to find the best
• Economies of scale. Because of its size, Compass typically
pays far less than individual investors for currency conversion and brokerage
• Convenience. Compass provides sophistication through
simplicity. There are many US investment managers out there, but we have
already selected those that we believe will succeed over the long term. And you
don’t have to worry about the complexities of the US withholding tax on
investment earnings — the fund does that for you.
• Liquidity. Most mutual funds offer daily redemptions at
the unit price at the close of trading for that day. With stocks, on the other
hand, you might have difficulty selling at the price you want, or even selling
at all, if the stock is not widely traded.
• Diversification. Many Albertans are overly concentrated in
Canadian equities. The Canadian market is small from a global viewpoint and
largely concentrated in the Financial, Energy and Materials sectors. To help
manage risk through diversification, and to leverage the greater opportunities
that US markets offers, Compass Portfolio Series takes an effective approach to
investing in one of the world’s most important markets.
Contact an ATB Investor Services Advisor and they will help
you determine if your portfolio is properly diversified, with adequate exposure
to US and other global investments. Working together, we can help you determine
the optimal asset mix for you and the appropriate allocation to US equities.