{{r.fundCode}} {{r.fundName}} {{r.series}} {{r.assetClass}}

Welcome to the new RBC iShares digital experience.

Find all things ETFs here: investment strategies, products, insights and more.

About this podcast

The uncertainty of what the next few months will look like for the Canadian economy has led investors to hold onto their cash. Stu Kedwell, Co-Head of North American Equities, joins Dave to discuss the current investment landscape, and why time in the market is key to unlocking long-term opportunities. (Recorded July 28, 2020)


Hello and welcome to the Download, I’m your host, Dave Richardson, and I’m here for Stu’s days with Stu Kedwell. Stu, how are you doing today?

Great Dave. How are you doing? Thanks for having me, as always.

I’m doing well. Now, we were having a conversation earlier about your vacation and the time you spent with friends and family. Canadians are holding investment dollars in cash and cash equivalents. And you had an interesting story about the thoughts of your relatives from vacation, which sort of ties into, I think, the way a lot of Canadians are feeling about markets and investing right now. Why don’t you go ahead and tell that story?

It’s an interesting point, as we’ve moved into Phase Two, and we start to see a few more people. Of course, always six feet apart. But you start to see a few more people. The topics of discussion naturally right now, from a financial standpoint, are the stock market, housing, and what’s going to go on with the economy in the back half of the year. It’s interesting because everyone wants to get on the realtor site, and have a peek at what’s for sale. What can we do? Should we look at a cottage? And what have you. Then on the stock market side, all is very focused on the volatility. It could go down a long way if the economy pauses into the fall. It’s always interesting, because people don’t have the same concerns when it comes to real estate that they do from the stock market. Against that backdrop, you have central banks that are quite persistent with their message: interest rates are going to be low for some time. And in fact, right now, the real rate of interest -- an interest rate less the rate of inflation -- is negative. Which means that if I have my money in cash, the very little amount I’m earning in interest after tax is not rising as fast as inflation. And that’s how (banks) want it, because that’s the way out of it, in their minds, through this crisis. So when you think about real estate — and there’s lots of good real estate, it’s always an interesting opportunity. But if you think about that opportunity, you have to pay a very large amount all at once. You have just one location. It’s been a very good investment over periods of time, and if you pick right, it can be a very good investment. Meanwhile, the stock market opens every day and offers a tremendous amount of diversification. It gives us the ability to say the central banks are saying something about what’s going to happen to the purchasing power of my money. Because the stock market opens every day, I can have a plan where I’ll sit there and I’m going to put a regular amount of money into the stock market through a period of time. It might be volatile, but I know that those businesses will protect me to some degree if inflation rises. Because their revenues will rise with it, and their profits will rise with it. That will provide a similar opportunity in all sorts of assets when we’re in that period of time. So, that was kind of the gist of the discussion we had with lots of friends and family. The stock market can be a volatile place because it does open every day. But it provides a similar opportunity over a long period of time to participate in an environment that is going to, in all likelihood, have very low interest rates for a very long period of time.

You’ve already seen the markets come back a significant amount. I think we both agree Stu: if we’re looking out to the next three to six months -- with so much uncertainty with respect to the virus, and to the global economy -- I don’t think anyone would say that we’re not going to see a significant amount of volatility. Which might cause pause for investors. But again, investing is not a three to six month exercise. That’s speculating, and trying to predict the market in the short term. When we’re talking about investments, it’s a longer-term proposition, and there are strategies like dollar-cost averaging, setting up a regular investment program, and getting in the right diversified portfolio, that really allow you to wade into the market. And even that volatility could be an advantage to you in the near term. But you set up to be where you need to be for the long term. Isn’t that really what investors should be focused on?

That’s a hundred percent correct. That’s exactly what people should be focused on. When I think about my own investment plan, I have a spreadsheet that runs 20 years. I’m going to try to pack it in sometime in my mid-60s. And I assume that my savings will compound somewhere in the neighbourhood of 7%. I do have a fair amount of equity in my savings, and it’s going to produce the income I need when I retire. And 20 years is a long way from now. The next three to six months might be volatile, but in 20 years I feel quite good about it.

Absolutely. And as always, we would put out the caveat that every individual is different. You’ve all got your own financial situation. So the best thing to do is get good advice before making that decision, and make sure that you go into whatever decision you make with the right investment and financial plan. Fighting the Fed, and fighting the kind of government stimulus and cheap money that is going around may be a tough battle, and that’s the essence of what you’re saying, right Stu?

That’s right Dave.

All right. Well Stu, thank you so much for your time. Looking forward to Stu’s days next week. And we’ll play this podcast for your relatives. It’ll be a safer way for them to get the right advice around investing for the long term.

Thanks very much, Dave.

OK, thanks Stu.


Recorded July 28, 2020

Please consult your advisor and read the prospectus or Fund Facts document before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. RBC Funds, BlueBay Funds and PH&N Funds are offered by RBC Global Asset Management Inc. and distributed through authorized dealers in Canada.

This report has been provided by RBC Global Asset Management Inc. (RBC GAM Inc.) for informational purposes as of the date noted only and may not be reproduced, distributed or published without the written consent of RBC GAM Inc. Additional information about RBC GAM Inc. may be found at www.rbcgam.com. This report is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. RBC GAM Inc. takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when provided. Past performance is no guarantee of future results. Interest rates, market conditions, tax rulings and other investment factors are subject to rapid change which may materially impact analysis that is included in this document. You should consult with your advisor before taking any action based upon the information contained in this document.

Any investment and economic outlook information contained in this report has been compiled by RBC GAM Inc. from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM Inc., its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM Inc. and its affiliates assume no responsibility for any errors or omissions.

All opinions and estimates contained in this report constitute RBC GAM Inc.'s judgment as of the indicated date of the information, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates and market conditions are subject to change. Return estimates are for illustrative purposes only and are not a prediction of returns. Actual returns may be higher or lower than those shown and may vary substantially over shorter time periods. It is not possible to invest directly in an unmanaged index.

A note on forward-looking statements:

This report may contain forward-looking statements about future performance, strategies or prospects, and possible future action. The words "may," "could," "should," "would," "suspect," "outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," "forecast," "objective" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties about general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.

® / TM Trademark(s) of Royal Bank of Canada. Used under licence.

© RBC Global Asset Management Inc., 2020