Weathering the Coronavirus: A Market and Portfolio Update

Updated: Mar 1

Its times like these that remind investors of the value of diversification beyond the equity markets.

First, it’s important to recognize that virtually every year comes with its set of economic, financial or political events that give investors reason to pause and take stock of their investment portfolio. And that’s exactly what happened this week for many investors overweight in the equity markets. Growing fears of the COVID-19 coronavirus and its potential negative impacts have sent shockwaves around global markets.


The Fear of the Unknown:

Coronavirus reports from mid-February were trending in a positive direction with China experiencing a slower pace in the growth of the infection rate. However, data this week showed examples of the virus spreading to other nations. As a result, there’s now concern about the economic impact beyond the borders of China on a global scale. Things are uncertain and stock markets hate uncertainty.


How is WealthCo Managing This Risk?

WealthCo’s core belief remains, “the best way to manage volatility and risk is to have a diversified portfolio beyond public equities”. Although the markets experienced a significant sell-off this week, the WealthCo portfolios did what they were designed to do, protect capital. With a smaller equity allocation focused on institutional equity managers, the WealthCo portfolios benefited by investing in alternative asset classes such as direct ownership real estate, mortgages, credit strategies and private equity. Our equity holdings of course experienced a pullback in value but with an average public equity allocation in our portfolios of 30%-35% the impact was reduced considerably.


We recently posted on the WealthCo blog a market commentary from one of our equity managers, Laurus Investment Counsel, commenting about the Coronavirus and how they are responding:


“In a generalized business downturn, balance sheets become pivotal. Our investment style is to own stocks of companies with solid and stable balance sheets. As usual, we will take opportunities provided by market volatility to trim exposures on stocks with full valuations, add more to stocks excessively beaten up by pessimism, and potentially add new names that decline into a favourable valuation range.”

Click here to read the full commentary.


Summary:

To close, it’s important to recognize the future is hard to predict. Every year will have economic, financial and political events that shape society. The 2000 tech bubble, the 2003 SARS outbreak, the 2008 credit crisis and the 2020 coronavirus outbreak. It's not the first event that draws investor anxiety, nor will it be the last.

We cannot eliminate portfolio volatility, but we can use strategies to significantly minimize its impact, “The best way to manage volatility and risk is to have a diversified portfolio beyond public equities”.


David Udy

Founder, CEO, CIO

WealthCo. Asset Management

WealthCo Asset Management utilizes the pooled investable assets of our client base to make singular investments in opportunities not traditionally accessible to the general public. By providing access to opportunities once out of reach for individual investors, we have evened the playing field with the institutions that have capitalized on the value created through strategic diversification.


In addition to greater access, our investment philosophy broadens strategic diversification across multiple asset classes addressing key concerns for investors, including but not limited to: Cash Flow Management, Interest Rate Mitigation, Legacy Protection, Corporate Tax, Strategies, Personal Tax Strategies, Preservation of Capital, Reduced Volatility.

To learn more about what our Investment Philosophy can do to help reach your goals and objectives please feel free to give us a shout - we're always open to the conversation.

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WealthCo is a corporate group that includes, WealthCo Planning Services Inc. and WealthCo Risk Management Inc. and WealthCo Asset Management Inc.  Investment Management services are provided under WealthCo Asset Management.  That firm is registered as an Exempt Market Dealer in the provinces of Alberta, British Columbia, Manitoba, Saskatchewan and Ontario.  It holds a Portfolio Manager license in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan and an Investment Fund License in the province of Alberta.  The information in this website is directed to individuals registered in those provinces.  The information provided here is for general information purposes and should not be construed as providing advice.  WealthCo has not independently verified any information set out herein.  Any opinions set out herein are subject to change and WealthCo does not undertake to notify the reader of such changes.