The Canadian stock market, loaded with value games, looks poised for a comeback

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There are other ways the TSX should benefit from economic reflation, including its strong exposure to precious metals and materials.

“The fact that central banks will let inflation heat up, I think is a reason to keep gold in the portfolio context,” Bangsund said. “For us, it ties into the entire Canadian history through the materials industry and sizable allocation in the TSX.”

It is also bullish on the loonie, which fell briefly to below C $ 1.30 per US dollar last week. Look for a vastly weaker US dollar and higher commodity prices, he said.

Real estate

“What you will see right now in real estate is that you will see the poor catch up a bit,” said Mitchell, whose firm focuses on real estate and infrastructure investments. Retail and office properties that have been hit hardest as markets churned by pandemic have more room to bounce back.

“Your more grocery and drugstore-related retail names will likely outperform. Your office names will likely outperform retail in the short term, as we start extrapolating more people who come back to work in the office,” he said. said Mitchell. Two favorites: First Capital REIT, which focuses on properties in Canada’s largest cities, and Allied Properties REIT, which deals with lower urban spaces.

McCreadie agreed that the pockets of the real estate sector look attractive from a valuation standpoint.

Thinking about income

In the traditional 60/40 portfolio – 60 percent stocks, 40 percent bonds – customers will have to start thinking about getting returns on the fixed income portion differently, McCreadie said. Extremely low interest rates on government bonds provide minimal income and leave investors vulnerable to capital losses when rates rise.

“Somehow, it can make them have heartburn,” he said. “There will have to be things, rather than sovereign bonds, in the next decade because they could be more harmful than useful.” Real estate and alternatives can provide some income and cover volatility.

Bangsund agrees: it is underweight in government bonds and overweight in Canadian equities. “This is a completely reflationary and value-oriented game.”

Bloomberg.com