Why it’s time for Canadians to explore a world of new investment opportunities

The world feels more uncertain than it has in some time for investors. Yet, rather than shrinking from the world, the time is right to be broadening exposure to it.

“There’s now a palpable desire among investors to look beyond U.S. and Canadian equity exposure,” says Gary McNeily, head of Product Development, North America, Equity and Thematic Solutions at Manulife Investment Management Ltd. in Toronto.

The current trade and tariff environment is a reason, but not the only one. The U.S. large-cap market remains heavily concentrated in large technology stocks, despite experiencing among the steepest declines in recent weeks.

“Most advisors would like a constructive allocation to global equities, but they’re wary of increased volatility that comes with it,” says Jordy Chilcott, head of Retail Intermediary Distribution, Canada, at Manulife Investment Management.

He notes exposure to markets such as Europe, Australia and Japan can reduce volatility through additional diversification. That said, a blunt MSCI World Index¹ exposure is unlikely to reduce volatility as much as desired. Increasingly, advisors and investors need a nuanced, active solution, diversified by both geography and investment expertise.

“We believe many of the solutions in the market aren’t innovative enough to address the challenges,” says Mr. Chilcott, citing the risk of stagflation.

“Our new solutions seek to manage the inherent risks of specific concentrations, like geographic and sector, in investors’ portfolios with a broader toolkit, including our liquid alternatives capabilities.”

Manulife Investment Management has designed an all-in-one global solution available in two variations: Manulife Global Core Equity Fund and Manulife Global Core Balanced Fund. These funds bring together strategically selected mandates with seasoned portfolio management teams. The idea is to provide bespoke exposures to deliver superior risk-adjusted returns.

All of the underlying equity funds are core in nature, featuring a mix of value and growth tilts. That aims to reduce volatility.

“Rather than having one manager running a large fund, who’s supposed to be the expert at everything, we offer a collection of our best-of-breed managers, each specializing in different aspects of global investing,” Mr. McNeily says.

For instance, Patrick Blais, senior portfolio manager with Manulife Investment Management’s Fundamental Equity Team, manages two existing mandates within the new funds: Manulife Climate Action Fund and Manulife Canadian Equity Class. Those two funds comprise 45 per cent of Manulife Global Core Equity Fund².

Mr. McNeily praises Mr. Blais’ ability to find companies that generate growing cash flows, a key indicator of long-term outperformance.

Manulife Global Core Equity Fund also includes a third-party manager, Calgary-based Mawer Investment Management Ltd. It subadvises Manulife Global Equity Class (25 per cent of the fund), a component that’s meant to serve as the long-term downside protector. The remaining 30 per cent includes Manulife U.S. Opportunities Fund.

While the allocations remain constant, fund managers are making decisions actively in their respective portfolios based on market and economic changes, Mr. McNeily adds.

With Manulife Global Core Balanced Fund, a new spin is put on traditional balanced exposure. Mr. McNeily believes the traditional 60 per cent equities and 40 per cent bonds split is unlikely to provide the needed growth advisors seek for their clients. “This is a global equity balanced fund, and most funds in this category typically have over 70 per cent equities exposure.”

The equity component of this balanced fund comprises 85 per cent of the portfolio, with the same investments as Manulife Global Core Equity Fund.

The 15 per cent fixed income allocation – 7.5 per cent to Manulife Core Plus Bond Fund and 7.5 per cent to Manulife Alternative Opportunities Fund (a liquid alternative fund) – is specifically chosen to lower the standard deviation and help dampen market volatility in equities.

“Then, we go one step further, employing an overlay strategy to help reduce volatility even more,” Mr. McNeily says. “The goal is to offer a higher return than a more traditional balanced allocation, with additional volatility mitigation.”

More broadly, the two Manulife Global Core funds give advisors and investors a cost-effective, one-stop solution for global exposure.

“We’re bringing together managers who are selected strategically so their expertise complements each other, providing superior diversification and lower volatility without sacrificing returns,” Mr. Chilcott says.

Advertising feature produced by Globe Content Studio with Manulife Investment Management. The Globe’s editorial department was not involved.