Invesco Canada blog

Insights, commentary and investing expertise

Why truly active managers aren’t afraid of rising rates

With interest rates starting to rise, many investors are wondering what impact, if any, the move upward might have on their portfolios. We asked Marina Pomerantz, a portfolio manager on the Trimark Global Equities team and Neeraj Khosla, an investment analyst covering emerging-market (EM) equities for the same team, for their views on the current interest-rate environment.

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Question: What is your outlook on the energy sector?

Our team doesn’t see much benefit in trying to predict volatile commodity prices. Rather, we value natural resource companies using a constant commodity price that tends to focus on the marginal cost of new production. The benefit of this approach is that it cancels out the “cloud of noise” associated with volatile commodity prices.

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Question: How do you view the oil & gas sector today?

Question: With investor concerns about China, interest rates and oil prices taking centre stage and valuations considered fairly valued, how do you view the oil and gas sector today? Are you currently invested in oil and gas companies in Trimark Europlus Fund?

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Question: Because the U.S. dollar isn’t accorded world reserve currency status, what does this mean for the markets?

Question: What is the impact on Canadian and U.S. markets when the U.S. dollar is no longer accorded world reserve currency status and when interest costs exceed $200 billion per year?

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Question: High cash levels make me nervous. When will you start buying again?

It makes me nervous when a Trimark manager has an unusually high amount of cash. In the past this has been a good indication that a pullback of some kind is coming. What catalyst do you need to start putting the cash to work? Are you waiting for a pullback or are there other scenarios that would result in you becoming a buyer again?       –Andrew

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Question: High yield is in fashion, but will it run its course?

In this market I personally believe that a missed opportunity is a higher risk.  My members are of the opinion of the blogger though; they don’t want to see a loss.  Is there the best of both worlds?  High Yield are in fashion currently but do you think they will run their course too quickly and leave us trying to do damage control? –Tammy

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