Buy Canada, says growth manager

Amid the growing number of voices encouraging investors to diversify their holdings, consider foreign equity funds and generally take money off the table and respect the significant run in Canadian equity stocks, the message that Canada is still a good place to look for growth, tends to stick out a little.

That message is exactly what Chuck Roth is telling advisors. The vice president of investments at Mackenzie Financial, and manager of the Maxxum Canadian Equity Growth and Maxxum Canadian Balanced funds, says Canada continues to be a good place to invest for growth and that the country is home to many companies that are growing consistently and providing superior returns.

“Just because the Canadian market outperformed in the last five years, now is not a time to sell,” Roth told his audience at the company’s annual Mackenzie University road show for advisors and planners. In discussing his fund’s investment strategies, he said investors are supposed to “keep your winners and sell your losers.” Right now, he added, “Canada is still a winner. It’s way too early to sell Canada.”

Looking forward to the coming year, he says Canada will continue to do well, but will likely underperform relative to the world economy. Emerging markets will likely pick up the slack, thanks to the urbanization of rural populations. In discussing world growth forecasts, he says India is beginning to look like China did in the 1980s and 1990s, while European and U.S. growth rates will likely be the slowest in the coming year.

In Canada on the other hand, Roth is calling for even stronger growth in the rest of 2006. He says the run in energy, metals, materials and commodities will continue, thanks to the fact that more than a million people every week are moving to cities in the emerging markets.

Along with this support, he points out that Canada has a surplus on both its current account balance and budget balance, and currently has the best debt to GDP ratio in the G8. Although productivity growth in Canada has slowed, he says the high dollar will encourage manufacturers to invest in technology and productivity enhancing measures.

In other sectors, Roth says financials continue to perform and consumer staples appear to be reliable for slow and steady growth rates. Along with this, he say that he believes core growth opportunities for his fund exist in Canadian mining companies with global operations, Canadian wireless communications companies and oil sands investments.

Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com