Mackenzie Minute: August 10, 2018
Michael Cooke, Head of the Mackenzie ETF Team, gives his perspective on how investors can mitigate the impact of market uncertainty and volatility.
MICHEAL COOKE: Well there's definitely a lot of noise. You've got political noise, geopolitical noise, economic uncertainty, and investors don't like uncertainty. It contributes to more volatility, more gyrations in financial markets, which can create a little bit of anxiety for investors. So, you've got that noise that translates into volatility, and it can cause investors to lose focus, or detach, or retreat from their investment plans.
Investors are still trying to figure out where we are in the economic cycle. What does it mean for inflation? What does is mean for interest rates? What does it mean for corporate profitability? You bring all that stuff together, it creates more uncertainty for investors of all stripes, and that translates into more volatility. Uncertainty means investors are trying to make changes quickly in and out of investments, that uncertainty leads to more risk… at least in the short term… but it really shouldn't deviate an investor or an advisor from the focus on a long-term investment plan.
Diversification is one step investors and advisors can take to improve outcomes and help stay on course towards long term objectives. In our partnership with TOBAM and our Maximum Diversification Suite of Mackenzie ETFs, that's exactly what we are delivering: An improved approach to diversification, but helping investors still stay invested in a core asset class like the stock market, so mitigating some of that volatility along the way by improving diversification, and helping advisors and investors better achieve the long-term investment objectives.