Do some of these statements sound familiar?

These are some common concerns investors have expressed over the past few months. We’ll explore these concerns in a 5-part email series covering key areas such as market timing, diversification, managing market emotions, managing risk, and the benefits of regular investing.

Managing market emotions

Behavioural finance teaches us that we generally feel a loss about two times more than any gain¹. So, it’s understandable for many of us that experiencing market volatility creates a roller coaster of emotions when investing. Giving into these emotions can quickly translate into poor buy and sell decisions.

Being aware of the prevailing emotions investors are experiencing during periods of increased volatility can help you better approach them during these highs and lows. Reminding them of the benefits of remaining disciplined and focused on the long-term goals you’ve worked on together is the best way to help them stay invested.

Having some perspective can help. In this piece, the Empire Life investment team reviewed past market corrections and the result of the market immediately following those negative periods.

A solution for managing market emotions

A good diversification strategy can also help manage the ups and downs of market emotions. Empire Life Asset Allocation fund offers tactical asset allocation to meet the challenges of markets today. The fund's investment approach led to best-in-class performance throughout the volatility of 2022²

Updated for 2023: Empire Life RRSP and TFSA Toolbox to support you and your clients this season. Get the toolbox.

Stay tuned for next week’s email about ways to manage risk.

¹ Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263-291.

² Empire Life Asset Allocation GIF was awarded the FundGrade A+ award for 2022

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

Segregated Fund contracts are issued by The Empire Life Insurance Company (“Empire Life”). A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a segregated fund is invested at the risk of the contract owner and may increase or decrease in value. Please read the information folder, contract and fund facts before investing. Past performance is no guarantee of future performance. All returns are calculated after taking expenses, management and administration fees into account.

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