As we prepare to bid farewell to 2020, a year for many reasons the world would like to put behind us, our ETF experts share their top investor takeaway as a year in review:
Michael Cooke, SVP Head of ETFs
The COVID-related financial market disruptions experienced in early 2020 were as extreme as anything we witnessed in 2008 or any other period since the first ETF launched in 1990. I have seen once again, ETFs pass the stress test, offering levels of liquidity and price discovery not seen in many other markets. Also, this year we have seen the accelerating relevance of ETFs as financial instruments as evident in the record ETF flows and AUM levels seen across most geographies.
Laurent Boukobza, VP ETF Strategist
Volatility happens and can always be expected. A portfolio therefore should be built with this lesson in mind and tailored to each investor’s risk tolerance, goals and time horizon.
Currently Canadian, US, and International Equity Indices are nearly at an all time high. As the world evolves, I believe this should be reflected in our portfolios.
For the past few years, I have held China Equities in my portfolio. Growth perspectives, demographics and opening of the domestic market increasingly justifies exposure to China in our investment thesis. Knowing full well that swings will happen; I am however confident in this allocation to hold in my investment horizon.
Prerna Chandak, VP ETF Product & Strategy
Portfolio diversification and patience are key in my opinion – we’re reminded of this during significant market events and it was not different in what has been a very trying year on all fronts. Having patience and discipline to hold steady with a diversified portfolio is an old adage, but still a very important one.
Naseem Husain, VP ETF Strategist
As a professional investor and trader who lived and traded through the Global Financial Crisis of 2007-2008 my experience reminds me that volatility comes and goes. I believe the largest investor takeaway for the year should be to “stick to your long-term plan”. I admit, my fear of losing money outweighed my interest in growing my wealth. I tactically moved to cash and fixed income with a plan to get back to my long-term strategic plan. Quite simply the thought was “should the market fall by 10%, I would leg back in”. Sure enough, those days and weeks did occur and since I already had the list of ETFs and stocks that I was to buy, I was able to get back into the market after three painful re-entry points in March and April. It is never easy as an investor to buy into a down market and immediately watch the ETF or asset you bought trade lower. This averaging into the market allowed me to enjoy the rapid market recovery that ensued, which remains counter-intuitive and disconnected with the human and economic suffering caused by the pandemic.
Stacey Steinberg, VP ETF Strategist
The lesson of COVID 19 for me was a reinforcement of something more than an ‘a-ha’ moment. Having seen it first hand, the ETF structure has been tested multiple times (2008/2009, flash crash, etc.) and yet the myth with the most strength prevailed, until COVID 19- “how will ETFs behave when the market crashes?” was the common question. Over the last eight months I have witnessed advisors come to the realization that ETFs have been, and continue to be, the vehicle of choice in times of stress. The ETF structure was created with market stress in mind.
Watch BNN’s interview with our ETF experts as they offer outlooks and insights into building strong portfolios in uncertain markets.