Caution advised on defensive stocks

Beutel global manager Gavin Ivory cites need to be selective.

Sonita Horvitch 22 May, 2013 | 6:00PM
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Gavin Ivory, global equity specialist at Beutel, Goodman & Co. Ltd., cautions that the love affair with defensive stocks, which has been particularly strong in the past three months, is not necessarily warranted by the companies' fundamentals.

A value manager, Ivory says that while there are select opportunities in the traditionally safer areas of the global equity market, such as consumer staples and health care, "the downside risk of some of these stocks is significant."

Valuations of defensive stocks are rich, he says, and expectations of earnings growth and dividend increases may not be met. "Companies are already paying out historically large dividends."

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Sonita Horvitch

Sonita Horvitch  

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