School’s Back! – Time To Prepare For The Rest Of The Year

By: Philip Petursson

September is a busy month as the kids go back to school and for us, back to busier work schedules as many of us took time off in the summer to spend with family. As we enter a busier time of the year it requires us to do our own version of homework as we prepare our client’s portfolios for the remainder of the year. So far, apart from the S&P/TSX, it has been a very good year. As of the end of August, the S&P 500 is +10.4% ($US), MSCI EAFE +14.7% ($US) and MSCI Emerging Markets +26.1% ($US), while the S&P / TSX is essentially flat. No doubt, 2017 so far has been a good year up to now, but how will the rest of the year unfold? Not only does September mark the end of summer but it has historically been a volatile month for equity markets.

Not only does September mark the end of summer but it has also historically been a volatile month for equity markets.

There are several events that could weigh down on markets in the near term including Congresses decision on the debt ceiling, Central Bank decisions in the United States, Canada, Japan and the Eurozone as well as geopolitical risk in the Korean Peninsula. The ingredients for a volatile month are certainly there. However, the S&P 500’s direction around political and geopolitical events has traditionally been of short-lived sell-offs with fundamentals eventually  dominating. At this point in time, we will put geopolitical risk aside, as it has proven to be almost impossible to forecast. With respect to US fiscal policy, we see no expectations in the market for prospective policy changes (tax reform), so there should be little disappointment on the lack of policy action. Our view has been that the current rally has been driven by economic and corporate fundamentals, rather than by expectations of policy change. With that in mind, here are our team’s view for the next twelve months, and the current weight for each asset class in our model portfolio.

To read full article click on the link:  “School’s Back! – Time To Prepare For The Rest Of The Year”