9/5/2013 1:05 PM |  Investing < Back
Importance of US Equities
Investors bo​re 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 risk exposure.


Big by Every Measure

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 manufacturing.


Why Compass Portfolio Series?

Investing in the US through Compass offers many advantages:

 • Professional 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 potential performers.

• Economies of scale. Because of its size, Compass typically pays far less than individual investors for currency conversion and brokerage fees.

• 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.

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