About BMO

News Releases

Interview Opportunity Active Investing Expected to be the Rallying Cry for Investing Strategy Over the Next Decade, Says BMO Harris Private Banking

The context:

After extensive consultations with internal and external senior market participants, BMO Harris Investment Management Inc. (BHIMI), the investment management arm of BMO Harris Private Banking, concludes that taking an active approach to managing investment portfolios is expected to be a successful strategy over the next extended business cycle. Essentially, in a market that is expected to be more fractured and less directional, the search for positive return on capital will increasingly depend on a deep understanding of trends that drive the markets and a focus in very specific sectors. This contrasts to the 1980's and 1990's where passive investing was king as ‘the rising tide floated all boats'.

According to Paul Taylor, Senior Vice President & Chief Investment Officer, BMO Harris Private Banking, the following sectors can be expected to yield greater than average growth in the next decade:

biopharmaceutical companies focused on the discovery and development of drugs in the areas of cancer, hematology and HIV;
oil and natural gas exploratory companies with significant discoveries and quickly increasing production; and
real estate REITs with significant holdings in the national market for prime retail space.

The key trends:

Five themes identified by BHIMI are expected to play a significant role in the performance of the markets over the next 10, 15, perhaps 25 years. The five themes are:

Supply Imbalances: significant gaps between the supply and demand of commodities in a global market.
U.S. Consumer vis-�-vis Globalization: potential weakness in U.S. consumers' economic health in the face of rapidly industrialising emerging markets.
Stores of Value: a potential shift in patterns of storing value in currencies, particularly the US$, precious metals, real estate and other financial assets.
Demographics: the relationship between global population growth rates and the impact that key lifecycle events have on demand for specific products and services over the next 10-20 years.
Role of Active Management of Portfolios: considering that the outlook for returns across a broad basket of securities is expected to be lower over the next 20 years relative to the previous 20 years, and that North American yield curves are expected to remain relatively flat over the coming years as inflation remains low, investment performance is expected to be driven largely by bottom-up security selection.

Understanding these themes and their impact on sectors of the markets – whether geographic areas, industrial sectors, asset classes, currencies, commodities – will help investors to forecast and direct their investments under multiple scenarios for the evolving economic and capital markets framework.

The analysis:

Paul Taylor, Senior Vice President & Chief Investment Officer, BMO Harris Private Banking, can provide insight in how these key trends are expected to evolve over the coming decade, how their evolution is expected to drive specific sectors of the economy and how to identify opportunities for investment that arise because of these changes. These five core themes will be central to BMO Harris Private Banking's analysis of the market and will underpin the development of investment management strategies over the upcoming decade or more.

- 30 -