As part of the RBC Private Investment Management (PIM) discretionary wealth management program, below is an update on a few of the key principles that our team continuously implements:

1. Rebalancing: Maintaining the strategic (long-term) asset mix of each account is important, and rebalancing quarterly is a minimum. In volatile markets such as 2022, we were rebalancing more frequently to ensure we maintained our strategic (long-term) asset allocation. This has benefited our portfolios in 2023 as equities have rebounded substantially.

2. Optimize tactical asset allocation: With equity markets under pressure in 2022, we began overweighting equities with the expectation of a rebound as inflation peaked. For example, a client with a 55% equity/45% fixed income strategic (long-term) asset mix, saw their allocation shift to 65% equity/35% fixed income as part of our tactical (short/medium-term) asset allocation. Equity markets have rebounded meaningfully in 2023, as inflation continues to decline and central banks near a pause in their rate-hike cycles. As such, we have taken some profits in equities to reduce our equity allocation and return our portfolios to the strategic (long-term) asset mix.

3. Alternatives allocation: Our Alternatives allocation continues to grow with the objective of minimizing portfolio volatility while maintaining our return and liquidity objectives. We will be profiling our Alternatives strategy in future posts, and how we use it to manage risk.

4. Tax planning: In 2022, our focus was harvesting tax losses and using the weak market as an opportunity to enhance tax planning. In 2023, our focus will be tax planning for investment gains. Using tools such as charitable giving or business tax planning are important, and we will discuss these items during our annual reviews.