On February 1, U.S. President Donald Trump announced new tariffs against Canada. In response, Prime Minister Justin Trudeau announced retaliatory tariffs on the U.S. Both sets of tariffs have been paused for 30 days.
While the situation continues to evolve, these events underscore the importance of:
- Holding a diversified portfolio to avoid over-concentration in one region or sector and insulate yourself from unpredictability across different countries, assets, and industries. Wealthsimple's managed portfolios are highly diversified. More on this below.
- Building an emergency fund so you're secure no matter what happens. With Wealthsimple Cash, you can earn high interest on your savings.
- Staying calm and consistent in your investment plan. Many studies suggest that individual investors who panic-sell during moments of uncertainty tend to lose more money than those who stay put.
We understand you may have questions about how these events may or may not impact your managed portfolio with Wealthsimple. To date, there is little to no impact on your Wealthsimple managed portfolio. This is because our portfolios are highly diversified.
Continue below to learn more:
How does Wealthsimple keep my portfolio diversified?
Our approach to diversification is to have exposure to asset classes, like gold and bonds, that perform well in times of economic hardship and to have exposure to the stocks that have less volatility than the broader market, which will outperform when the economy struggles.
Our portfolios are also globally diversified. We have low home bias which helps insulate your portfolio when the local economy suffers, and our international stocks give you assets that perform well at different times because they give exposure to different macroeconomic cycles. We also do not hedge our equity exposure, so when the US dollar appreciates relative to the Canadian dollar, which tends to happen in times of crisis, it improves returns and offsets losses in the stock market.
Should I lower my risk score?
Your risk score is based on your personal economic situation and investment goals, not what has happened in markets over the weekend.
If you have changes in your financial situation or your objectives our team can help you update your profile to receive a new portfolio risk recommendation.
How do I know how much risk to take?
The answer is different for everyone and depends on a number of factors including your objectives, your investment time horizon, your level of income, your net worth, your investment knowledge, your past investment experience, and your personal tolerance to risk. You can read more about it here: Advice on Risk Profiles
As a registered Portfolio Manager, Wealthsimple has a responsibility to act in your best interest. Your portfolio assignment is designed to align with the goals, objectives and risk tolerance you have shared with us. Our approach is to stay invested in a suitable, well-diversified portfolio through market ups and downs as we believe this gives you the highest probability of building wealth over time and achieving your goals.
How much of my portfolio is invested in Canadian stocks vs. US stocks?
Canadian stocks represent a small percentage of our portfolios. For example, our Classic growth portfolio has 10% exposure to Canadian stocks. US stocks are about 30% of our growth portfolios. Learn more about our classic portfolios.
Is Wealthsimple planning any rebalancing in response to the tariffs conflict?
At this time, we are not planning any changes to our asset allocations based on the tariffs conflict. This is because our portfolios are designed to weather a variety of economic circumstances.
We systematically rebalance (i.e., buy and sell) assets within portfolios based on market fluctuations to maintain a strategic asset allocation. We sell assets that have appreciated and buy assets that have depreciated. This keeps our portfolios well diversified, and has the advantage of systematically buying depreciated assets, which over time may have benefits to returns.
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