Exploring investment opportunities beyond Canada’s borders is a powerful strategy for building a portfolio that weathers changing market climates
For B.C. investors concerned with building or managing their wealth, real estate has been an unavoidable preoccupation over the last decade. First came the burgeoning housing market in Vancouver, the Lower Mainland and beyond, which made residential real estate such an attractive asset. Then, residential sales in the first 10 months of 2018 dropped more than 22 per cent and home values fell 1.7 per cent overall.
The impact of market-calming and anti-speculative measures on residential real estate implemented at the local, provincial and federal level—plus new mortgage-qualifying rules and rising interest rates—present an impetus to look beyond our backyards for investment opportunities.
“Obviously, you don't want to put all of your eggs in one basket—and that means diversifying by asset class, so you have both fixed income and equities, but also looking at diversifying geographies as well,” says Derek Massey, head of portfolio management at HSBC Global Asset Management (Canada) Limited.
For Massey and his national team of portfolio managers for wealth management customers, the current investing climate provides ripe opportunities for diversification. While Canadian investors will always want to hold some domestic investments, in the context of international financial markets, Canada makes up a small piece of the pie. “You want to go outside our borders to diversify companies, countries, currencies—all that plays a key role in how we invest money at HSBC,” says Massey.
HSBC has investment professionals in 26 countries around the world, which creates a network of local knowledge and “intellectual capital” that inspired Massey to bring his 20-plus years of experience to the company more than four years ago. “The opportunity to talk to investment professionals around the world was quite intriguing for me. I can pick up the phone and talk to a colleague anywhere around the world and find out what's going on,” he says.
Massey simplifies investing outside Canada into two categories: one is developed markets, such as Europe and the U.S., which have less risk but perhaps also less potential for growth; another is emerging markets that can represent a greater growth opportunity. This growth is often accompanied by a greater level of risk, however, which is exactly why most Canadians turn to experienced international investment professionals.
Among other emerging markets, Massey cites the BRICS (Brazil, Russia, India, China and South Africa) group. “If you look at the growth opportunities of a country like India, the [Gross Domestic Product] levels are significantly higher than we see in developed markets here in Canada and the U.S.,” he explains. “You could buy a mutual fund, for example, that invests in Brazil, Russia, India and China. HSBC also has mutual funds that invest in Asian equities.”
HSBC not only offers professionally managed, diversified opportunities within mutual funds and through a discretionary investment service for high net worth clients,but also lower-risk options like Guaranteed Investment Certificates (GICs). In addition, theHSBC InvestDirect account allows consumers to tap into the power of self-directed online trading in international markets. HSBC investment professionals can also provide guidance about which investments make the strongest contenders for registered plans like RRSP or TFSA accounts, as well as non-registered parts of a portfolio.
Massey’s top piece of advice for investors is that they should truly understand the industries and companies in which they invest. Though it might sound daunting, that understanding can come not only through professional advice but, as he points out, from everyday experience.
“As you go through your day, regardless of what you touch, what you eat, the clothes you wear or the things you do, the boundaries for the products and services that you use come from beyond the Canadian border,” he says. “You really want to touch those with your investments as well.”
HSBC Global Asset Management (Canada) Limited (“AMCA”) is the manager and primary investment advisor for the HSBC Mutual Funds. HSBC Investment Funds (Canada) Inc. “HIFC” is the principal distributor of the HSBC Mutual Funds which are also distributed through authorized dealers. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus, Fund Facts, and other disclosure documents before investing. Mutual funds are not guaranteed or covered by the Canada Deposit Insurance Corporation, HSBC Bank Canada, or any other deposit insurer or financial institution. The net asset values of all mutual funds, including the HSBC Mutual Funds, may change frequently and any past performance may not be repeated. For money market funds, there can be no assurances that such funds will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you.
HIFC is a direct subsidiary of AMCA and an indirect subsidiary of HSBC Bank Canada, and provides its services in all provinces of Canada except Prince Edward Island. AMCA is a wholly owned subsidiary of, but separate entity from, HSBC Bank Canada and provides its services in all provinces of Canada except Prince Edward Island.
The Private Investment Management service is a discretionary service offered by HSBC Private Wealth Services (Canada) Inc. Under this discretionary service, assets of participating clients will be invested by HSBC Private Wealth Services (Canada) Inc. or its delegated portfolio manager in securities, including but not limited to, stocks, bonds, pooled funds, mutual funds and derivatives. Commissions, trailing commissions, management fees and expenses all may be associated with the use of the Private Investment Management service. Neither the Private Investment Management service nor any of the securities purchased as part of the Private Investment Management service are guaranteed or covered by the Canada Deposit Insurance Corporation, HSBC Bank Canada, or any other deposit insurer. The value of an investment in or purchased as part of the Private Investment Management service may change frequently and past performance may not be repeated.
HSBC Private Wealth Services (Canada) Inc. is a wholly owned subsidiary of, but separate entity from, HSBC Bank Canada and provides services in all provinces of Canada except Prince Edward Island.
HSBCInvestDirect is a division of HSBC Securities (Canada) Inc., a wholly owned subsidiary of, but separate entity from, HSBC Bank Canada. HSBC Securities (Canada) Inc. is a Member of the Canadian Investor Protection Fund. HSBC InvestDirect does not provide investment advice or recommendations regarding any investment decision.
The contents of this document are for informational purposes only, are subject to change without notice, and are not intended to provide specific financial, investment, tax, legal or accounting advice to you, and should not be relied upon in that regard. You should not act or rely on the information without seeking your own financial, investment, tax, legal or accounting advice.