Canadian investors face no shortage of uncertainty as the U.S.-Canada trade war drags on while global conflicts raise prices and rattle markets, but investing has always involved managing a range of risks, an expert says.
“Investors aren’t paid for certainty, they’re paid for how they manage uncertainty,” Duane Green, CEO Americas at Aviva Investors, told BNN Bloomberg at the Toronto Global Forum.
The annual economic conference kicked off Wednesday at the Fairmont Royal York, where business and finance leaders gathered to discuss a range of issues from trade and investment to sustainability in the global economy.
Green said it’s important for investors in the current environment to build a portfolio that can manage itself through “multiple shocks or events” that may materialize in the months and years ahead.
“It really comes down to portfolio construction and not just on one particular outcome,” he said, noting that investors may need to rethink what it means to diversify their holdings.
“Diversification has evolved… I think a lot of people think of diversification as being a mix between stocks and bonds, and I think there’s a lot more now that goes into building a diversified portfolio.”
Investors need to consider diversifying across both asset classes and markets, Green said.
“Implementing good portfolio construction is using both public markets for liquidity and private markets for different return streams different sources of income to really balance out that portfolio,” he said.
“You can lower your volatility and manage the risk profile of the portfolio better, so it is something that people need to look at.”
‘Adapting to a new world’
An investor’s ability to change and adapt within a given environment is crucial to success, Alan Tannenbaum, CEO of BMO Capital Markets, told BNN Bloomberg from the forum on Wednesday.
“From our perspective, the way we’re really helping our clients is by helping them be resilient,” he said.
“In this environment that feels like almost every day there’s a new headline, a new geopolitical event that we all have to adapt to… our role is to help our clients navigate that and think about how you make adjustments and go through that process of adapting to the new world.”
Tannenbaum noted that a big theme at the forum and others like it around the world is artificial intelligence (AI) and how it’s set to transform the global economy.
He said that he and his team see clear investment opportunities around the complex infrastructure needed to deliver on the ambitious AI projects some of the world’s largest companies are embarking on.
Betting on Canada
That also includes investments in AI-adjacent areas such as critical minerals and energy, Tannenbaum said, two sectors being tapped for further development in Canada.
Attracting more business investment into Canada has been a stated goal of Prime Minister Mark Carney’s government since he took office, and Green said he believes that bodes well for investors across the country.
“I am very bullish on Canada right now, and I always have been, but we have got a very unique moment, a pivotal opportunity or an inflection point for Canada to really move it forward,” he said.
“The current government has laid the framework for this potential future growth, now we need to focus on execution.”
Green argued that Canada’s “investment thesis” is clear, and that capital will always find its way toward good ideas, but identifying and removing obstacles will be key.
He asked: “Can we clear out some of the other roadblocks or potential hurdles to allow that capital to get deployed quick enough for us to really capitalize and take advantage of it?”
