Continue to add to existing funds, especially those in your portfolio with weak short-term records. They’ll be back.
Our thinking: As long as you have your time horizons properly thought out, investing now will not be a problem. By that we mean don’t invest in stock funds unless you have at least five years to hold. And at five years, consider only the most conservative of stock funds — those with large-cap holdings and those most broadly diversified.
For funds that are volatile or concentrate their holdings by industry or by region, take an even longer outlook. The same for small-cap funds.
Neither we nor anyone else can tell whether markets will break out of their recent trading ranges to the upside or to the downside. Even those who claim they can intelligently guess at this question tell us they have to see whether indices hit certain support or resistance levels before making a determination whether the bull market is to continue, or a market correction has started.
That’s all technical mumbo jumbo telling us that if stocks fall beneath a certain level, they’ll continue to fall. The same argument applies to the upside. Some predictions!
Regardless of what happens, we do believe that investing properly in equities pay off handsomely over time. So don’t let current conditions, or market opinions, scare you out of the process.
What to do: If you have a time frame of just five years, think about investing in only the most conservative equity funds. These include Mac Ivy Canadian and Foreign Equity Funds from our Planning Guide.
For time frames of five to 10 years, Franklin Bissett Canadian Equity, Mawer Canadian Equity and NEI Northwest Canadian Equity Funds make good choices.
If you have a time frame of more than 10 years, however, you can afford to be more aggressive and select an offering like Dynamic Value Fund of Canada (see pages 14 and 15 of the May 5th issue).
For further details on Funds mentioned in this column please consult our monthly Mutual Fund Planning Guide.
Canadian Mutual Fund Adviser, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846