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A subsidiary of Great-West life recommends that a return to fixed-income securities

by

Alain Thériault

January 12, 2018 13:30

Photo : Freepik

Subsidiary investment in Great-West, GLC asset management Group ‘s (GLC) believes that the time has come to reduce the overweight positions in the shares, and increase of bonds and other fixed-income securities to protect against a downturn in stock markets.

According to Brent Joyce, head of the investment strategies of GLC, investors should mitigate the overweight in equities and underweight in fixed income assets.

A slowdown is normal to provide

«Today, optimism is high among investors, businesses and consumers. However, the order of things is that as we move forward in the economic cycle, an improvement of the economic situation becomes more difficult. It is healthy and to be expected that a slowing down of the normal economy to occur at a given time «, he said.

A favourable wind… until when ?

In its report Outlook on financial markets of 2018, GLC indicated that the signs of a great uncertainty amoncèlent at the top of the financial markets, but not to the point of return to the balance between equities and bonds.

«At the current rate things are going, we believe that favorable conditions will last long enough for it to be precipitated of gone by now positioned neutral. However, caution is warranted and we will have to show us flexible in the positioning of our investments, » said Mr Joyce.

Momentum sufficient

«Our baseline scenario for the outlook of the financial markets to 2018 is that the global economy has a momentum sufficient and that inflation and financial conditions will remain favorable long enough for us to continue to favour equities relative to fixed income securities,» he wrote in his report. GLC also less optimistic about the possibilities of performance shares and, at the same time, a less pessimistic with respect to fixed income, than it was six months ago or a year ago.

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