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How this money manager is preparing for the potential for more interest rate hikes

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Geoffrey Heward of Heward Investment Management in Montreal is selling energy and consumer discretionary stocks and increased his cash position to 20 per cent to protect his portfolio

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“I think it’s dangerous to declare the all-clear,” says Mr. Heward, partner and senior portfolio manager at Heward Investment Management Inc. in Montreal. His call comes after the Bank of CanadaMr. Heward believes the central bank could raise rates yet again this year and the U.S. Federal Reserve Board could also hike its benchmark rate once or twice more in 2023 to try to curb stubbornly high inflation.

“Historically, markets never bottomed before a recession has started,” Mr. Heward says. “The historic inversion of the yield curve and reduced liquidity in the financial system with much tougher lending standards says investors and businesses should be careful.” His fund was up 2.9 per cent year-to-date as of May 31. It was down 1.6 per cent in 2022 and has seen an average annualized return of 8.1 per cent over the past three years. The performance is before fees and expenses and doesn’t include stock dividend payments.

 

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