Ladan Shokrgozar, senior portfolio manager at Harbourfront Wealth Management Inc. in Vancouver. Illustration by Joel KimmelThe Globe and Mail
Stock markets have been on a wild ride in recent weeks amid the conflict in the Middle East, but renewed peace talks could refocus investors and bring some longer-lasting stability, says money manager Ladan Shokrgozar.
“Despite the volatility, we could end up having another strong year from a macro viewpoint,” says Ms. Shokrgozar, senior portfolio manager at Harbourfront Wealth Management Inc. in Vancouver, who oversees about $600-million in assets.
Still, she says the dramatic swings have underscored her team’s strategy to diversify its holdings across multiple asset classes, including North American and global equities, fixed income and alternatives such as private debt and real estate.
The asset allocation depends on each client’s risk tolerance and investment time horizon, but the average is about 55 per cent to 60 per cent in equities, 30 per cent to 35 per cent in alternatives and the remainder in income-generating positions.
Although private investments have faced extra scrutiny in recent months amid reports of bad loans and liquidity constraints, Ms. Shokrgozar says the sector remains an important part of a defensive portfolio.
“The fundamentals remain stable,” she says of private markets, overall. “We continue to hold assets in the space and are diversified within it so that, if there are liquidity constraints in certain segments, there are other assets to draw from.”
Her average balanced portfolio has returned about 5 per cent so far this year, and 13 per cent over the past 12 months. The three- and five-year annualized returns are 11 per cent and 7 per cent, respectively. The performance is based on total returns, net of fees, as of April 17.
The Globe spoke with Ms. Shokrgozar recently about what she’s been buying and selling.
Name three top picks in your portfolio right now.
Caterpillar Inc. CAT-N, the world’s largest manufacturer of construction equipment, is a stock we’ve owned through our global equity strategy.
We increased our position in the fourth quarter of last year as we grew our exposure to global markets and the artificial intelligence space. We see Caterpillar benefiting from the commitment technology companies have made to build AI infrastructure, such as data centres. It’s also a leader in the construction and engineering equipment space, has strong fundamentals and a strong growth outlook. The stock is up about 51 per cent [as of April 17] since we increased our position six months ago.
Taiwan Semiconductor Manufacturing Company Ltd. TSM-N, the multinational semiconductor manufacturing and design company, is another stock we bought more of in the fourth quarter last year to increase our global weighting and our exposure to AI beyond the Magnificent Seven.
We’re very selective when we buy into emerging markets because of the risks. While some money managers got into this space a few years ago, we’re okay to forgo some gains until we see some stability. TSMC’s stock did well last year and saw a lot of expansion, so we felt comfortable adding more when we did. And given the rally in AI, it’s worked out well for us. The stock is up 26 per cent since we added more to our portfolios in the fourth quarter.
iShares Core MSCI Canadian Quality Dividend Index ETF XDIV-T, which holds a basket of high-dividend Canadian stocks mostly in sectors such as energy and financials, is an exchange-traded fund we also increased our exposure to in the fourth quarter.
It’s part of our philosophy of always complementing our growth stocks with more defensive positions. We like that it holds high-quality companies with strong fundamentals and has an income-generating component. We couldn’t have predicted that oil prices would spike the way they did recently, but it has helped us do well with this position. The ETF is up about 20 per cent since we added more of it in the fourth quarter.
Name a stock you sold recently.
Given our investment philosophy of preparing rather than reacting, we’ve mostly rotated out of high-interest savings accounts over the past six months, which were attractive short-term positions when interest rates were higher and they were paying about 4 to 5 per cent.
Now that we’ve seen several interest rate cuts, those returns aren’t as favourable. Today, we hold very few interest-bearing positions in our portfolios unless the funds are earmarked for a client’s near-term financial goals.
We also trimmed some of our better-performing stocks in areas such as technology late last year, including some of the Mag 7 stocks, which have seen strong growth over the past few years, to rebalance our portfolios and ensure clients maintain an aligned allocation.
This interview has been edited and condensed.