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On this week’s episode of Free Lunch by The Peak, we chatted with Andrei Bruno, the Director of ETFs at Fidelity Canada, about investing in an uncertain economic climate.
When equities are struggling, how should investors respond?
“When you are seeing equity market drawdowns, the name of the game is to stay diversified but also try to get defensive and outperform the market on the downside. If the market's down 1%, I only want to be down 0.7%—which is something we call downside capture.”
Is a recession in Canada still a likely scenario?
“I think we will potentially get some sort of recession next year. And I think the risks are a bit higher in Canada relative to the US. You haven't really seen the shoe drop in employment yet, but manufacturing numbers are contracting and earnings continue to be revised lower.”
If we see rate cuts, and maybe there's a recession, what decisions should someone make about their portfolio?
“Bonds would do well for you in that scenario. Fixed income is going to be your friend in that scenario. Think of your defensive sectors—healthcare, utilities. The value of your holdings will go down, but losing less money than the market average is what matters when you talk about compounding returns over a 10, 20, and 30-year investable period.”
This interview has been edited for clarity and length. Listen to the full conversation here.