Final word

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Other topics that keep our guest
portfolio managers awake at night


RICHARD JENKINS

Black Creek International Equity Fund

RICHARD JENKINS

Biography

THE NEED FOR DIVIDENDS

Many investors today own equities due to a need for income. This has increased the need for dividends. Normally this would be a good thing, but unfortunately it has gone too far. We are increasingly seeing companies lever up their balance sheets to pay dividends or buy back shares.

“The other unintended consequence is the effect of management teams reducing capital expenditures and R&D to fund growing dividends. This works in the short term, but in the long term the companies who do this will lose customers and ultimately fail. We will not invest in such companies with our clients’ money.”

RBC Global High Yield Bond Fund

JANE LESSLIE

Biography

THE 21ST-CENTURY SILK ROAD

For some years Ian Bremmer, who runs our political risk consulting firm, the Eurasia Group, has been talking about a G-Zero world – a world with no anchor countries prepared to lead the rest. At first glance, the U.S. presidential election seems to confirm the trend, with the U.S. apparently poised to turn more isolationist.

“Through a myriad of steps across a wide swath of countries, China’s One Belt, One Road (new Silk Road) initiative is taking shape faster than we realize. China is investing in other countries’ infrastructure and forging new trade links. This could further complicate analysis of capital flows out of China.”

Dynamic Equity Income Fund

Jasonbiggs

Biography

SHORT-TERMISM

It has never been this short term. The only way to be successful is to think long term. Those that have been successful – Sir John Templeton, Warren Buffett, Peter Lynch – think long term. They do not get themselves wrapped up in short-term events, such as the U.S. presidential election or the Greek financial crisis. 

But what is happening in our industry globally is that the average time of ownership of a stock has never been this low. The average investor now only owns a stock for about eight months. That is not even close to investing. That is speculating and hyper-trading.

“The largest arbitrage available to most investors right now is probably to do what almost no one else does, and that is to think in 10-year increments. Because, when you are doing that and you are taking up your time horizon, your chances of winning are much better. There are a lot of statistics out there that will tell you your probability of losing money over 10 years, 15 years, 20 years gets closer and closer to zero over time.”

BRIAN W. H. BERGHUIS

TD U.S. Mid-Cap Growth Fund

brianberghuis

Biography

GREATER RISK TAKING

Eight years after the onset of the global financial crisis, regulators and central banks continue to engage in an extraordinary monetary experiment by suppressing interest rates. This has impaired the capital market allocation function and led to greater risk-taking generally. The experiment’s impact is especially evident in Silicon Valley. This innovation hub has become the epicentre of financial speculation with cheap money cascading in.

“I’m concerned that 2017 may be the year we see a number of the large, privately funded technology companies – the unicorns – falter.”

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