Mutual fund investors can expect a lot of movement in their portfolios in 2012, just not all in the desired direction. In speaking with experts at four Canadian banks, two words came up again and again: volatility and dividends. While all four were fairly cautious about the investing environment for the next year, there are definitely opportunities to be had. Here are their viewpoints:
1 / Eric Lascelles, chief economist, RBC Global Asset Management
Look at asset classes other than stocks and bonds: One of them is dividend-offering portfolios: Companies with particularly high dividends are attractive when interest rates are so low, when the prospect of earnings growth is uncertain. The same sort of comment applies to credit, which is to say, corporate bonds, often times offering that reasonably attractive yield. And you can make the same sort of comment about high-yield bonds.
2 / Vincent Delisle, director, investment strategist, Bank of Nova Scotia
Areas we would be most comfortable with in 2012 would be banks and the telecom sectors. These two areas provide lower volatility and higher dividends. Two other areas would be technology and industrials. For the resource sector, which is 50 per cent or more of the Canadian market, there may be a better opportunity to overweight this group once the extent of China's slowdown is more visible.
3 / Marco Lettieri, economist, National Bank Financial
We suggest more defensive sectors - telecommunications, utilities and consumer staples. We also suggest sectors that are less influenced by international activity, like telecommunications, which have most of their revenues generated within North America. You can also include integrated energy - refineries - because their business is generally pretty stable. However, they will be a bit more volatile in price.
4 / Colum McKinley, V-P Canadian equities at CIBC Global Asset Management
We think the banks are likely to continue to deliver high single-digit earnings growth and offer attractive dividend yields. We're also overweighted in the lifecos [life insurance companies] and in energy stocks in Canada. I prefer the integrateds over some of the higher-yielding energy names.
These interviews have been edited and condensed
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