Home Breadcrumb caret Economy Breadcrumb caret Economic Indicators Breadcrumb caret Investments Breadcrumb caret Market Insights 3 reasons to pull back on U.S. equities Find out what will weigh on U.S. equities in 2015. By Melissa Shin | January 15, 2015 | Last updated on November 1, 2023 2 min read After a long-standing overweight of U.S. equities, Luc de la Durantaye has shifted to neutral—despite the fact that most analysts expect the U.S. to outperform this year. Listen to the full podcast on AdvisorToGo. De la Durantaye, first vice-president of global asset allocation and currency management at CIBC Asset Management, says he has three reasons for decreasing his holdings to market weight. He manages the Renaissance Optimal Inflation Opportunities Portfolio. 1. Valuations are too high “U.S. equities have appreciated, and have been some of the best-performing, over the past few years,” he says. That makes them too expensive, especially since he’s a value investor. Read: Winter didn’t freeze U.S. equities U.S. and Eurozone equity values overblown 2. Fed policies will adversely affect companies He expects U.S. interest rates to be higher than those in other countries. “American companies will have to deal with a less accommodative central bank than in Europe or Asia.” Read: When inflation comes, which market’s best? 3. The U.S. dollar is strengthening A strong greenback makes U.S. exporters less competitive, says de la Durantaye. What’s more, “the Canadian dollar was at parity when we started buying U.S. equities,” and it’s now hovering near 84 cents. “From a valuation perspective, we’ve benefited from the depreciation of the Canadian dollar, but we don’t expect the Canadian dollar to depreciate much further from here.” Read: Is U.S. dollar too dominant? Which funds outperformed in 2014? Short-term bonds are overvalued Why is U.S. outpacing global peers BoC in a risky situation, says Russell Investments Melissa Shin Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip. Save Stroke 1 Print Group 8 Share LI logo