Our 3 Wishes for 2023

In 2023, we wish that investors avoid ‘hot trends’, that advisors help investors identify sustainable funds, and that investors take care with their mortgages.

Ian Tam, CFA 28 December, 2022 | 12:40PM
Facebook Twitter LinkedIn

Santa Letter

Unlike last year, 2022 was not great year for investors. A war in Ukraine coupled with hyperinflation and subsequently interest rate adjustments caused the market (both bonds and equities) to go into a temporary freefall. Even alternative asset classes like digital currencies, which historically haven’t really correlated to much of anything, have taken a dive. Certainly, things could have gone better. Despite all this, I kept my head down, stayed invested and rebalanced my portfolio appropriately. Hopefully I made the ‘nice’ list again this year. If by chance I did, here’s what I’d like for Christmas:

Wish 1: Investors Stop Chasing 'Hot Trends'

That new investors take note of some of the ‘hot’ investing trends, and their eventual outcomes. Cryptocurrencies and thematic fund products, to name two specifically.

Though these riskier investments are great fodder for discussion around a water cooler or more appropriately, memes, they have historically not rewarded the retail investor.  Goals-based investing is a long, disciplined (read: boring) journey that largely revolves around traditional stocks and bonds. Investors shouldn’t ignore the fact that the broad majority of thematic funds (or those that follow a trend like robotics, big data, and cryptocurrencies) historically have not ended well for the long-term investor. In fact, many of these funds close.

Exhibit 1

Wish 2: Investors Learn About the New Sustainable Investing Framework

We hope that advisors take note of the new framework put forth by the Canadian Investment Funds Standards Committee, that helps investors finds funds and ETFs that have disclosed their approaches to sustainable investing.

Advisors can use this information, alongside Morningstar’s own view on sustainable investing to help everyday investors invest in line with their own non-financial preferences to help the planet and its people.

Exhibit 2

Wish 3: Canadians Learn the Best Mortgage Option for Their Personal Situation

The Canadian housing market has been itself a rollercoaster for Canadians. This, coupled with a rapid rise in interest rates may leave many Canadians with less in their pocket each month come mortgage renewal time. That said, mortgage lenders do offer an extended amortization period as a way to keep monthly cashflows the same (but you’ll be in debt for longer). When in doubt here we hope Canadians seek financial advice from a financial planner or and advisor.  

Here’s to a better 2023!



Facebook Twitter LinkedIn

About Author

Ian Tam, CFA  Investment Specialist at Morningstar Canada. 


© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility