Global Insight Monthly - September 2023
I am pleased to share the latest investment strategy report from RBC Wealth Management — Global Insight, which provides our current thoughts on asset classes, the economy, and timely issues that impact investment strategy.
The income is back in fixed income
Sharply rising interest rates in recent years have boosted bond yields, shifting the investment calculus for portfolios that combine equity and fixed income holdings. With yields approaching or exceeding the return targets in many financial plans, we think fixed income should play a bigger role in balanced portfolios.
Global equity: The waiting game
While global equity markets have been touched by the summer doldrums, we believe there is enough fuel in the tank to push stocks up to new highs in the next few months. Still, 2024 will likely be a less upwardly dynamic year for stocks—particularly if a recession were to arrive over that interval, as we expect.
U.S. recession scorecard: Status quo U.S. recession scorecard: Status quo … almost
It is a certainty the autumnal equinox is scheduled for Sept. 23. What is not so certain is the timing of a recession, as it has been a relatively quiet summer on the scorecard front.
Advice Event: Artificial Intelligence
Understanding the basics, practical usage & investment implications
When: Tuesday, September 26th @ 12:00pm – 12:30pm PST
Where: Virtual Event - Hosted via Cisco Webex
Guest Speaker: Sarah Johnson, Ph.D, TEP, LL.M, JD, CFP VP High Net Worth Planning Services
Please join us for our next advice event, featuring special guest Dr. Sarah Johnson. We will discuss the basics of Artificial Intelligence (101), the practical applications of this technology, and the longer-term investment implications and opportunities.
Dr. Johnson is a VP for RBC Wealth Management – Family Office Services and is a recognized expert in digital assets. She is a licensed California Attorney, Co-Chair of the STEP Digital Assets Interest Group in London, UK , active member of the International Bar Association, the U.S. Board of Professional Advisors of International Art Market, the Art and Law Institute in London, United Kingdom, and the Art Law Center in Los Angeles. She has completed several certifications in art taxation, planning and transactions management from Sotheby's Institute of Art in New York and the European Institute for Innovation and Sustainability in Rome. Sara specializes in international estate planning, art collection and digital legacy planning in ultra-high-net-worth families in developing their wealth and legacy plans.
Central Bank Digital Currency and the Future of Money
Central bank digital currencies (CBDC), in some form, are likely to be adopted by an increasing number of countries. Nations with a high percentage of electronic payments, or a relatively concentrated and small banking system, may find it easier to introduce some form of a CBDC. In time, these countries or others may realize the efficiency potential of central bank digital currency in a secure format. For now, however, we believe CBDCs should be viewed as an adjunct to existing payment and banking systems. We see evolution, not revolution.
Monthly Housing Market Update
Hot Summer, cooler housing market in Canada
The path ahead for Canada’s market is likely to be bumpy. We expect higher interest rates to keep curbing buyers’ enthusiasm for months to come, while possibly forcing the hand of some current owners to sell. A recession would further generate headwinds as rising job losses and economic uncertainty undermine market participants’ confidence.
Responsible Investing: Back to Basics on ESG
In 2022, we saw a rise in headlines questioning the role and effectiveness of ESG integration or investing, and in the use of third-party ESG ratings or ESG data. In many ways these headlines demonstrate the mainstreaming of ESG, and open the door to healthy and constructive debate around the challenges and limitations of responsible investment approaches, such as poor data quality, low data coverage, or insufficient disclosures.
However, in many cases, the headlines highlight the confusion and misunderstanding that exists around what different responsible investment terms mean. This is understandable, as the lack of consistent definitions and terminology is one of those challenges that needs to be addressed. A good place to start is by going back to the basics.
This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ®Registered trademarks of Royal Bank of Canada. Used under license. © 2022 RBC Dominion Securities Inc. All rights reserved.