- A portfolio solution allows you to invest in a carefully chosen, well-diversified mix of mutual funds and/or exchange traded funds (ETFs).
- The portfolio is managed for you by a team of investment professionals.
- The portfolio team rebalances the portfolio to keep it on track as economic and market conditions change.
Some people are do-it-yourself investors by nature. They like to research and manage their investments themselves. Other investors may use advisors to help them build a portfolio, but remain involved in the day-to-day management to keep their investments on track. Either way, there are many decisions to make along the way. For example:
- When to invest?
- Which investments to buy or sell? In which countries and which sectors?
- When to make changes or rebalance?
- How do you stay on track as markets, interest rates, inflation and other economic factors change?
For millions of Canadians, the easiest investment experience is when you can hand all those decisions – and many more – over to a team of investment professionals. This can be done by investing in a portfolio solution.
Sample portfolio solution asset mix
Four things to check before you choose a portfolio solution:
- Is it a good fit with your financial goals, investing preferences and risk capacity?
- Is it managed by investment professionals?
- Is the portfolio well-diversified across asset classes and regions?
- Does the investment team rebalance the portfolio to keep it on track as economic and market conditions change?
Many are actively managed: investment professionals make decisions on a daily basis that keep the portfolio well positioned as market conditions change.
Portfolio drift happens as markets rise and fall over time. If one asset class in the portfolio does very well, it will grow in value and represent a greater share of the portfolio’s total investments over time.
Why does this matter? It has to do with setting the level of risk you want as an investor.
Why is it important to correct portfolio drift?
Think of it like a dial that needs to be adjusted from time to time. For example, if equities rise in value, you’ll be exposed to more risk in the portfolio. If fixed income rises in value, you could end up with a more conservative portfolio, with less potential growth – the flip side of too much risk.
Either way, it’s important to ask: is this the investment experience you want? Have you got the right balance of risk and reward? If not, rebalancing a portfolio can turn the dial back to the right place for you. For example, you may need to sell some of your equities. Or add more fixed income.
With a portfolio solution, the investment team will do all this for you. And more.
Tip: When it comes to risk, it’s not just your ability to tolerate risk emotionally, it’s also your capacity to handle potential losses. Read more about finding the right balance between volatility and returns and take our risk capacity quiz now.
Tip: You can adjust the target risk or target date of your portfolio at any time if life – and your financial goals – change. Learn more now about how investing in target-risk and target-date portfolios works.