Sophie Palmer of Jarislowsky Fraser is part of Wealth Professional Canada' Outstanding Portfolio Managers 2018
Firm: Jarislowsky Fraser
Position: Partner and portfolio manager, private clients
Years in wealth management: 19
Years as a portfolio manager: 13
Certifications: CFA
Approaching her 20th anniversary in wealth management, Sophie Palmer believes advisors and portfolio managers provide a vital service that isn’t always acknowledged by the public.
“I believe the wealth management sector needs to do a much better job of communicating the unique value we provide clients,” she says. “First and foremost must be how well we are aligned with the key social values that are driving our clients’ goals and objectives.”
In addition, she says, the industry’s credibility suffers when unscrupulous advisors are allowed to practice. This can be avoided with more stringent requirements for professional credentials, as well as a clearly defined code of conduct. And then there’s the issue of fees.
“Our industry must show professionalism by improving clarity and transparency regarding fees and avoiding any self-serving conflicts of interest,” she says. “In everything we do, we must communicate how much the interests of our clients should come first.”
As a PM, it’s Palmer’s responsibility to navigate the various headwinds in the markets on behalf of her clients. While she believes there’s some cause for concern right now, she thinks a prolonged downturn is unlikely.
“Canadian companies continue to see a healthy underlying economy, and we continue to have it as the largest single asset allocation in our balanced portfolios”
“We had been preparing for increased market volatility – from a very low baseline – as investors become more focused on increasing interest rates in certain parts of the world, alongside rising inflation indicators,” she says. “While this has pressured valuations somewhat, our investment outlook remains unchanged, as we do not see a recession on the horizon.
Our basic premise remains that as long as earnings can increase, even at a more moderated pace, markets can slowly appreciate while digesting the changes in the macroeconomic environment. That said, we are likely in the later stages of the business cycle, and we do see some excesses in the valuations of other tangible asset classes, such as residential real estate in certain areas."
In fixed income, Palmer’s position remains the same, regardless of what moves the Bank of Canada might make this year.
“The strategy does not change – we still focus on high-quality corporate bonds,” she says. “If rates are rising because of better economic growth, then corporate bonds should outperform. We have a long-term investment horizon, so our focus is more on valuations, and currently we find corporate bond valuation neutral, given the advanced stage of the business cycle.”
While some of the other PMs featured here are moving money out of Canada, Palmer believes the domestic market still provides good value for investors.
“Canadian companies continue to see a healthy underlying economy, and we continue to have it as the largest single asset allocation in our balanced portfolios,” she says. “In addition, given some underperformance in the Canadian market in the recent past versus other markets, valuations have moved to a level that is relatively attractive versus other markets.”
But that’s not to say a home bias is blinding her to opportunities farther afield. “As longterm investors, we have been allocating funds towards faster-growing markets to take advantage of the benefits of diversification and global leaders in other geographies,” Palmer says. “In particular, emerging markets have become a more substantive part of our asset mix in recent allocations, along with meaningful exposures to other global markets such as the US.”
