Volatility isn’t changing the way clients invest

The majority of Canadians investing for retirement (58%) will stay the course with their portfolio mix, despite recent market volatility. They say that one bad year in the equity markets won’t change their investing style in 2016, finds a CIBC poll.

Other poll findings include:

• 18% will invest more defensively to protect their original investments.
• 5% say they will invest more aggressively to get higher returns.
• 56% did not achieve the returns they expected over the last year because of declines in equity markets.

“While there is a fear factor for some investors in volatile markets, those who know how to put a volatile month or a challenging year into perspective are more likely to be comfortable with their investment strategy, and investment returns, over the longer-term,” says David Scandiffio, president and CEO, CIBC Asset Management.

Read: Don’t depend on interest rates to shore up economy: BoC

A report from CIBC Economics finds that Canadians are holding onto $75 billion in excess cash because of market volatility. The report notes that historically Canadians have waited too long to get back into the market, costing them billions in lost investment returns.

Women more likely to avoid stocks

The poll shows women are more risk averse than men when it comes to investing. Women tend to hold a higher percentage of their portfolio in GICs, savings accounts or other guaranteed investments. Further:

• 43% of women are currently invested primarily in stocks, compared to 60% of men; and,
• only 33% will invest primarily in stocks, compared to 53%of men.

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Millennials least satisfied with returns

The poll also finds that younger Canadians struggle the most with their retirement investments. Nearly two-thirds (65%) are failing to achieve their expected returns and 33% plan to change their asset mix due to market volatility.

Read: Volatility stifles ETFs in Canada, U.S.

Still, 43% say they won’t let one bad year in the markets knock them off course; 25% don’t know what to do; and 19% intend to invest more defensively. Meanwhile, 14% intend to invest more aggressively to get higher returns.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.