Van Arbor: Investing in the rest of the market

Canada is definitely in the global spotlight these days. Our financial system is envied by most, our currency is strong, and our natural resources are in demand. It should be no surprise then to find energy, financial, and material companies making up almost 80% of the TSX index. This kind of market concentration means that most Canadians portfolios are influenced by those three sectors.  Much of last year’s market rebound was focused on these very sectors; however, in the process the other side of the market received little attention and has yet to fully participate in the market recovery. Fortunately, that is good news as it means that there is still value in the market if you look hard enough.

While most Canadian’s investment exposure is in the big three sectors, attention should be paid to the other 20% of the index which offers potentially better opportunities for relative and absolute growth. Which sectors make up the other smaller half of the market? They are mostly less cyclical sectors like utilities, consumer staples, telecommunications, and health care. It is these sectors that were ignored last year and potentially offer better value going forward. Often in investing, the best opportunities are where no one is looking.
Read more…