Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

How Inflation-fighting ETFs have fared

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By Dale Roberts, cutthecrapinvesting

Special to the Financial Independence Hub

Last Summer, Rob Carrick at the Globe and Mail asked a few major ETF providers to offer up some inflation protection. In a recent post Rob delivered the inflation-fighting ETF scorecard. There are a couple of obvious winners and a few head-scratching ETFs offered up as inflation-fighters. Here’s the inflation-fighting scorecard, plus the Sunday Reads.

Here’s the post (paywall) on the Globe & Mail.

And let’s get straight to the goods. It is no suprise that oil and gas stocks led the way. That is the only sector that provides consistent inflation coverage. Also, base metals are doing their thing. Gold is solid. Vanguard offered up a balanced portfolio (insert WTF emoji face) as an inflation fighter. And they do that after ignoring their own research on inflation and assets.

Drum roll … and the results Continue Reading…

Identifying Opportunities through Infrastructure

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Image Franklin Templeton/iStock

By Shane Hurst

Managing Director, Portfolio Manager,

ClearBridge Investments, part of Franklin Templeton

(Sponsor Content)

Last month, I wrote in Financial Independence Hub about infrastructure as an asset class and the opportunities it can provide for both retail and institutional investors.

I would like to follow up on this by explaining the process we use at ClearBridge Investments, and specifically the approach we take with the Franklin ClearBridge Sustainable Global Infrastructure Income strategy.

Our Global Infrastructure Income team is based In Sydney, Australia and manages funds in the U.S., U.K, Australia, Europe and Canada. Having launched in 2010, the strategy has built assets under management of US$4 billion.1

With inflation at multi-decade highs, war in Ukraine, not to mention the ongoing pandemic, risk management is front of mind for many investors. Adding infrastructure to a balanced portfolio of global equities and fixed income is designed to increase returns while decreasing risk.

Expertise in Infrastructure

Years of experience in the infrastructure space has allowed the ClearBridge team to develop the expertise required to select companies that are best placed to prosper over the long run.

With backgrounds in M&A and unlisted infrastructure, debt and equity financing, buy and sell trading, as well as government and regulation, the team constructs a portfolio of 30–60 listed companies where excess return, yield quality and risk assessment drive position sizing. Given that this is a sustainable fund, ESG integration is another crucial element, as it is for the firm overall: ClearBridge Investments was an early signatory to the UN Principles for Responsible Investment back in 2008.

Companies positioned to Succeed

In building the portfolio, the investment team scans the globe for high-quality, listed companies that are positioned to meet the strategy’s income and growth goals. Nextera Energy is one such firm. The largest renewable energy producer in the U.S., Nextera is made up of the parent company Nextera Inc., which owns a regulated utilities company in Florida, as well as Nextera Energy Partners, a yield-oriented renewables vehicle.

The firm’s renewables deployment is expected to increase by more than 50% over the next three years, so it is well placed to benefit from the move towards net-zero carbon emissions across the global economy. Nextera’s strong market position also provides competitive advantages that are driving equity returns that are well above the cost of capital, while its long-term contracts are supporting attractive dividend yield and dividend growth. As a leader in renewable energy, it’s not surprising that the company scores highly in the ‘E’ part of ESG, but it also excels in social and governance metrics too, with strong employee safety standards and excellent management and succession planning. Continue Reading…

Zoomer Magazine: my column on investing in Crypto

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Zoomer Magazine has just published a column by me on investing in cryptocurrencies. Contained in the June/July 2022 issue, the headline is The Crypto Conundrum.

There is an online version but it is not yet available: when it is, I will update with a clickable link. Alternatively, you can subscribe to the print edition and/or the digital edition, by clicking here.

As the adjacent artwork shows, “this notoriously volatile investment is not for the faint of heart” and I therefore “advise caution.”

As Murphy’s Law would have it, between the time the article was written and edited, crypto crashed, with Bitcoin plunging below US$30,000. In fact, this weekend was a brutal correction for crypto in general: see this Reuters report on Bitcoin touching an 18-month low of US$23,476 over the weekend.

The article does of course stress the volatility of this asset class and it goes without saying that if you’re a long-term believer in crypto — a so-called HODLer (for Hold On for Dear Life) — then you’re much better off investing in Bitcoin closer to $30,000 than the near $60,000 it reached late in 2021.

The article arose when a Zoomer editor was intrigued by a MoneySense column I wrote early in 2021 about my own personal experience with investing in Cryptos. You can find it by clicking on this highlighted headline: How to invest in Cryptocurrencies(without losing your shirt.

The gist of both articles is that I suggest investors restrict themselves initially to just Bitcoin and Ethereum, which I regard as the “Big 2” of crypto. I also suggest using ETFs in registered portfolios, and taking profits if and when they materialize: by selling half on any double, you can do what Mad Money’s Jim Cramer calls “playing with the house’s money.”

The other guideline I offer is to restrict total crypto investments to 1 or 2% of your total wealth: a range recommended by billionaires like Paul Tudor Jones or Stanley Druckenmiller. 

Start small and try to play with the house’s money as soon as you can

 If you find you lucked out and the 1% becomes 3% or the 2% becomes 5%, then sell about half so that you’re back to your original target.

The article notes that as reported here, as of January 2022, Fidelity has 2% in its balanced and 3% in its more aggressive asset allocation ETFs. FBAL has 59% stocks, 39% bonds, and 2% crypto while its growthier FGRO is 82% stocks, 15% bonds and 3% crypto. These seem to me prudent allocations for investors wanting a sliver of crypto. Continue Reading…

New Equity-linked GICs offer equity twist on humble GIC

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By Rachel Megitt, Vice President,

Term Investments & Savings, RBC

(Sponsor Content)

If you’re looking to grow your money, the future looks a lot different than it did even a few months ago, given the current volatility in the markets and intensifying inflation.

We often hear the adage “big risk equals big reward,” but what if you want the reward but aren’t comfortable taking the risk? This is where a new twist on a traditional investment is proving to be a powerful option: equity-linked GICs (Guaranteed Investment Certificates).

In the summer of 2021, we shook up our product line-up and added two new equity-linked GICs that also represented RBC firsts and proudly shared the news, including in a Findependence blog.

New GICs with an equity twist

Within the first six months, we saw client enthusiasm about these two new “GICs with an equity twist” surge well beyond our expectations. Our clients have been clamouring for these GIC options and we believe this reflects the overall desire of Canadian investors to tap into what equity-linked GICs provide: the appealing combination of a guarantee for their initial investment, plus the higher return potential that comes with an equity investment.

While we knew we had created two truly compelling and competitive GICs, we never imagined how strongly these new GICs would resonate across the country. The buzz surrounding these equity-linked options is helping reshape investment conversations in Canada. These GICs offer investors who are reluctant to buy individual equities the opportunity to step into the world of equity investing at both a pace and level of risk they are comfortable with. Continue Reading…

Is It time to start implementing Cryptocurrencies In your Business?

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By Nonso Nwagbo

Special to the Financial Independence Hub

Considering accepting cryptocurrencies for payment? Here’s what you need to know.

Let’s face it. The use of cryptocurrencies in business is swiftly gaining ground, yet many business owners are at a crossroads on whether to implement them. Before you decide to accept cryptocurrencies, you need to know the benefits and risks.

Remember that if you need budgetary support to manage the transition, you can explore financing options like microloans.

What are Cryptocurrencies, and how do they work?

Cryptocurrency is a virtual currency that any central government does not regulate. Instead, it is supported by blockchain technology.

Blockchain technology refers to creating a shared ledger that cannot be manipulated. The technology uses sophisticated computer algorithms to record and track transactions and assets within a network.

The most popular cryptocurrency is Bitcoin, launched in 2009.

Cryptocurrencies are used;

  • As a means of exchange for goods and services
  • As digital assets that store value.

Pros and Risks of using Cryptocurrencies In your Business

Pros

●      Greater Acceptability

More businesses, particularly global corporates like Amazon and PayPal, accept payments by digital currencies and have greater adoption of cryptocurrencies.

Moreover, more people are aware of cryptocurrencies and how they work.

●      Superior Payment Security

Initial misgivings regarding the security of cryptocurrencies slowed down its adoption. However, cryptocurrency transactions offer enhanced protection superior to that credit cards.

Credit card payments require third-party verification, which makes them prone to fraudsters. On the other hand, cryptocurrency transactions do not require centralized proof but use sophisticated computer algorithms, making it nearly impossible to steal personal information.

●      Lower Transaction Costs

Cryptocurrencies are way cheaper when compared with banks and digital payment platforms such as PayPal.

Cryptocurrencies charge a near-nil to no charge for transactions.

What’s more, cryptocurrencies are convenient for settling international payments in about 10 minutes. This facilitates international payments from your customers abroad.

●      Customer Acquisition Strategy

Cryptocurrency as a payment option is cheaper and more appealing to the tech-savvy younger generation.

Cons

●      Volatility

Compared with government-issued currencies, cryptocurrencies fluctuate in price widely.

The volatility can challenge businesses with substantive amounts of crypto in their reserves. For that reason, companies that trade in crypto often convert cryptocurrencies into fiat money to mitigate against the risk. Continue Reading…