In light of the recent developments in Ukraine, we have made changes to our portfolio positionings.
- As early as December we began rotating sector exposure as leadership changed – most notably shifting into energy, materials and financials.
- Financials continue to benefit as rates have moved higher.
- Materials and energy benefit from higher commodity prices.
- Within materials, we have continued building exposure to base metals, as global economic data remains very strong.
- We have added exposure to aluminum which could be a target for U.S. sanctions on Russia driving prices higher. We are avoiding any Russian companies.
- We have added precious metals with this sector rallying as safe haven assets – and have increased gold exposure over the last few weeks.
- Fertilizer prices have continued to climb as Ukraine and Russia produce a large amount of the world’s urea. Barometer has been adding to positions in CF Industries and Nutrien which benefit from higher fertilizer prices. Agriculture exposure has been increased.
- And most recently, have increased exposure to defence stocks as the U.S. is most likely to increase defence spending.
- The technology sector continues to be weak and thus exposure has remained substantially underweight since the beginning of the year.
In summary, we have not added a lot of cash yet – as we are still finding sectors that are performing well. At this point, it is what we don’t own that is as important as what we do own, and will increase cash positions if needed.
Please see recent sector changes below.
If you have any questions, feel free to reach out to your relationship manager.
President, Chief Investment Strategist
Barometer Capital Management Inc.
Brookfield Place, 181 Bay Street, Suite 3220
Toronto, Ontario, M5J 2T3