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Winter 2007 |
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Online Only
F I N A N C I A L
Exploring the
U.S. opportunity
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Stock Photo |
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U.S. equity markets have
recently faced a number of well publicized headwinds, but it’s important
to keep these short-term economic trends in perspective. U.S. economic
fundamentals remain strong, corporate earnings are healthy and stock
valuations are attractive.
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By Joan MacCarthy |
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U.S. equity markets have recently
faced a number of well publicized headwinds, but it’s important to
keep these short-term economic trends in perspective. U.S. economic
fundamentals remain strong, corporate earnings are healthy and stock
valuations are attractive.
Several key themes make U.S. investments
an interesting opportunity—particularly for Canadian investors with
goals of earning strong long-term returns, diversification and managing
risk:
Broader diversification. Investing
in the U.S. can give you more exposure to major world industries such as
consumer goods, technology and health care, which can increase your
portfolio’s overall return potential, while managing risk.
Strong returns. The U.S. market has
outperformed the MSCI World Index over the past 20 years. An analysis of
the index shows that a global portfolio with U.S. exposure has outpaced
a global portfolio without U.S. exposure by approximately 1.1% annually.
Currency advantage. With the
Canadian and U.S. dollars valued much closer to par, Canadians are now
able to buy shares in the world’s largest equity market at historically
low prices.
Economic stability. The U.S.
remains an economic powerhouse. Inflation is below average, unemployment
is low, consumer spending is relatively strong and U.S. corporate
earnings continue to rise. Plus, many major U.S. companies derive
earnings from overseas sources, and are able to benefit from a strong
global economy.
Attractive valuations. U.S.
corporate earnings have been growing at an above-average rate for the
last five years, yet share prices have not kept up. As a result, some
U.S. stocks currently offer attractive valuations compared to the
current and expected future profits being earned by American companies.
For more information, visit
MDfinancial.cma.ca
or call 1 800 229-1798.
Commissions, trailing commissions,
management fees and expenses may all be associated with mutual fund
investments. Please read the prospectus before investing. Mutual funds
are not guaranteed, their values change frequently and past performance
may not be repeated. Obtain a copy of the prospectus before investing by
calling your MD consultant or the MD Financial Trade Centre at 1 800
267-2332.
MD Financial includes CMA Holdings
Incorporated companies offering financial planning and a banking
referral service arrangement through MD Management Limited, mutual funds
by MD Funds Management Inc. and MD Private Trust Company, investment
counselling services by MD Private Investment Management Inc., estate
and trust services through MD Private Trust Company, and insurance
products by MD Life Insurance Company and MD Insurance Agency Limited.
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