Almost one month on from the surprise election result south of the border and the markets’ reaction can be summed up with one word: volatile. There’s certainly been a lot of activity, but what should investors be doing in the current, tumultuous investment environment? We caught up with the COO of AIMA Canada, James Burron
, to find out.
“Everyone thought that Trump’s victory would be the end of the world, but that didn’t really occur,” Burron says. “One thing that’s come out of this, not only with Trump but with Brexit too, is that people are on notice that anything can happen.”
Burron believes that, from an investment perspective, these big events make people think about risk management in a different way. “Investors can put on those option positions to cut off the tails because, more often than not, they’re happening,” Burron says. “There’s so much that investors can do right now with hedging the risk, especially on the alternative side.”
The shockwaves of the Trump victory are still reverberating through the global financial markets, but rather than reacting negatively to the new environment, investors should be grasping the new opportunities.
“I usually like times of volatility: if things are going well, there is no reason to change but if things are bouncing around people think they should act,” Burron says. “Trustees may look at a portfolio and see an opportunity to do something new. Some will see opportunities in the alternatives area, whether it’s infrastructure or real estate or in the liquid side: CTAs with managed features are a good investment selection in the volatile environment.”
Burron sees the current market landscape as a good excuse for advisors to make contact with clients; it’s the best thing an advisor can do whether times are good or bad. He encourages advisors to try something new and maybe even put on a special Trump seminar. “If you can present how a portfolio might relate to Trump, some clients will find that interesting. It’s a great way to get some face time,” Burron says. “What do people get out of their advisor; what do they want? They want interactions that make them believe that their advisor be trusted.”
Putting on a Trump seminar or education session will also help an advisor become known as source of important knowledge; someone who is up-to-date with the most important macro factors and knows how to react to them. “It’s important that advisors have something topical to say, you don’t want an advisor stuck in 1967 or 2014,” Burron says. “A small series of events is relatively cheap to pull off and an advisor could brand it as client appreciation, people love that. Do a few sessions in different parts of the city, show people that they’re top of mind for you.”
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