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A prolonged downturn in stock markets this year made investment strategies to mitigate losses and even eke out some gains all the more important to advisors and investors.
Setting up for an eventual recovery in equities – especially in battered sectors like technology – in the new year also become a key part of how advisors were positioning clients’ portfolios.
Looking back over the past year, here are the top 10 Globe Advisor investment stories that readers flocked to for market perspective and advice.
Surging inflation and interest rate hikes gave stock markets a rough ride this year, but a dividend-growth strategy could help smooth out some of the bumps. These equities, which offer rising payouts and potential for capital gains, tend to be companies that are well-managed and financially strong. They have regularly scheduled dividend payments that can cushion the blow when markets struggle and help protect against inflation. Three fund managers share their top picks.
Uranium remains one of the only ways retail investors can bet on the nuclear power renaissance. That, however, is about to change. Many more investment opportunities are coming, says Jeff Geringer, director of commercial and corporate development at uranium miner Denison Mines Corp. in Toronto. “In the next year or two, it’s going to be a regular occurrence to see public offerings or corporate spin-offs that are looking to provide direct investor access to the nuclear theme,” he says.
When it comes to growth, the big three global fast-food chains are all of one mind. McDonald’s Corp. MCD-N, Yum! Brands Inc. YUM-N, and Restaurant Brands International Inc. QSR-T, are all heading east to emerging markets. While the pandemic has slowed them down, their expansion in these markets is an unstoppable force, analysts say. All three are adapting menus to local tastes, finding domestic partners, and reducing operational risks through master franchisees.
Appetites for defensive investments are growing alongside recession fears, and asset managers are offering new ways of quenching those desires. Horizons ETFs Management (Canada) Inc. became the latest provider to launch a product designed to offer stability amid persistent market volatility with its new exchange-traded fund (ETF), Horizons Canadian Utility Services High Dividend Index ETF UTIL-T. It joined a handful of other ETFs composed of infrastructure assets that can provide consistent earnings and high dividend yields during economic downturns.
For investors who think we will increasingly live virtually in 3D – think virtual 3D meetings, sporting events, and shopping – the question becomes how best to get exposure to this burgeoning sector without picking some losers among the eventual winners? The easiest way to play the metaverse may simply be to buy an ETF that offers exposure to the technologies that are and will be used in various everyday applications such as private social interactions, education, business, and retail.
Fears of a recession are dominating the market, raising questions around the potential impact on oil demand and inventory, and ultimately, its price. If there’s a recession, oil prices will move down slightly, but the supply versus demand gap is so large that it’s unlikely that prices will go below US$90 a barrel, or, at best, US$80. It won’t hit the lows seen in the past cycle, write Amrita Sen of Energy Aspects Ltd. and Eric Nuttall of Ninepoint Partners LP.
Prices of EVs jump on battery and materials shortages but experts say investors will be rewarded in long run
For electric vehicles, 2022 was a year of dubious distinction. It’s the first since the EV revolution began that the price of a new car or truck is going up, not down. The price pressures include a shortage of lithium and other metals that are essential components of batteries. For investors, the question is whether to stay clear or stay invested. Consumer demand for EVs remains strong and political will to meet carbon reduction goals means subsidies, such as those announced in the federal budget.
Small but mighty may best describe faith-based investing’s impact in Canada these days. Indeed, the fact many advisors are likely hearing more from clients about how their investments can help address climate change or reduce social inequality is partly a result of decades of the slow yet steady influence of faith-based investors seeking to have their money do good as well as generate profits. Still, measuring faith-based investing’s growth is challenging. A recent study shows that faith-based wealth firms have not kept pace with responsible investment’s expansion.
Miners are moving quickly to ramp up supplies of critical elements needed for the low-carbon energy transition. That means opportunities for investors to benefit from that rapid shift are also rising fast. There are currently very few mutual funds or ETFs available to Canadian investors composed specifically of commodities seen as crucial to the development of clean technologies – such as lithium, cobalt, tin and platinum – or the companies producing them. But experts say there are ways to identify the players that offer lower risks.
Uranium stocks are basking in a warm glow these days. The spot price for uranium – a metal that goes through several industrial processes to become fuel for nuclear power plants – has started to recover after a decade-long bear market triggered by Japan’s Fukushima nuclear disaster in 2011. Because the uranium sector is small relative to other commodities, its stocks “can really take off in price” when many investors chase them, says an expert. However, a “black-swan event,” such as another major nuclear accident, is always a risk.
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