Emin Baghramyan

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live,brought to you by TD Direct Investing. Every day, I'll be joined by guests from across TD, many of whom you'll only see here. We'll take you there with moving the markets and answer your questions about investing. Coming up on today show, we're going to have a look at the world of low volatility stocks and why this might be a interesting time to take a look at the space. Emin Baghramyan joins us on the show. And in today's WebBroker education segment, Bryan Rogers is going to shows how you can find information about Jesse's on the platform. So here's how you can get in touch with us. Just email moneytalklive@td.com or you can fill out the viewer response box right under the video player on WebBroker. And before we get our guest today, let's get you an update on the market. Of course, the US midterm elections, they have arrived. It is election day south of the border. Of course, as investors, it's all about the compositionof the house and the Congress. Senate and house seats both in the mix and what it would mean that forPres. Biden's legislation plans. results will start coming in this evening in the wee hours. Tomorrow, we'll have a better idea where we are headed. Right now, the market making some gains. Of about 177 points right now on the TSX Composite Index, almost up a full percent. Seeing some pullback in the US dollar against a number of its major trading partners,so we are seeing a big surge in gold which is benefiting minors, including Barrick Gold. Let's check in on that name right now. We are up more than 7% to 21 bucks and nine cents per share on that one. Trans alto Corp. coming out with his recent earnings, swinging back to a profit at higher Alberta power prices. They are up 8% at 12 bucks and $0.84 per share. South of the border, let's check in on the S&P 500, the broader read of the American market as Americans go to the polls. Right now, up a pretty decent 47 points, 1 1/4%, 3854. Tech heavy NASDAQ is rallying as well today to the tune of 1 1/2%. And of course, beyond all the macro concerns that we have and electoral concerns and what Congress is going to look like, we are still in the sake of earnings season and we are still getting some corporate news. Kohl's is saying their CEO is going to step down following pressure from some activist investors. That stock at 2945 is up almost 10%. And that's your market update. Some of the big swings we've seen in the markets this year might be tough for some investors to handle. If you are looking for a little more stability, you might consider investing in low volatility stocks. Joining us now for more on the space is Emin Baghramyan, lead Portfolio manager for global low volatility equities at TD Asset Management. Great to have you on the show. >> Thanks for having me. >> This might be peeking some people's interest, low volatility stocks. When we are talking about the low volatility space, was at the are we talking about? >> Let me say what is a low volatility stocks. These are the stocks attend to have relatively low price volatility and relatively stable annual returns. we can analyse this… We can measure its correlation also with broad market and we know if the broad markets beta is one, so the low volatility stocks tend to have a beta lower than one. So those are low volatility stocks. Low volatility investing is basically an investment style that is designed to invest in stocks with these types of characteristics and avoid companies the 10 to have the opposite characteristics leading to higher volatility. So that is based on the whole ideagenerating returns via low volatility investing is turning the historically widely accepted market notion that you take more risk and you are rewarded with higher returns. So we brought a chart here. >> Myth versus reality, let's take a look at this one. >> If we look, it is very logical to assume that if you are taking more risk, you should get more returns. And historical data, it has shown some evidence of that kind of relationship existing between asset classes. If you go from cash to tables, from tables you go to longer term government bonds and then you go corporate bonds and then he could equities, that relationship exists. You take on more risk and you are expected to be compensated for it. However, the relationship becomes a lot trickier when we go into the equity space by itself. So after a certain point of time, investors tend to miss price the very risky parts of the market and then that is why that mispricing results in the fact that you are not being adequately compensated by investing in the most risky parts of the market. So what the low volatility strategy means is that to continuously avoid these risky parts and basically be able to generate market like returns but with less risk basically improving your efficiency and equity investing. >> That's a great foundation, but the reason why we've seen all of this volatility this year is because of the big macro concern, which is inflation. What the central banks of and trying to do about it, giving us the jumbo sized rate hikes. It you have pretty sticky inflation, trying to work it down. You got central banks raising the cost of borrowing, setting up this volatility. Do low volatility strategy still work and that kind of environment? > We actually argue that low volatility invest staying is facing a Goldilocks environment. We are, you are right, facing this incredible battle between central banks and inflation, and inflation has, so far, has had the upper hand with the central banks trying to counter it with jumbo sized rate hikes. But who wins in this battle? If inflation comes in stronger-than-expected, continues to do so, that will keep interest rates higher for longer, that will put pressure ona lot of tech stocks and a lot of growth stocks that tend to be very volatile. They tend to be expensive. They tend to be less profitable, especially certain components of them. And even though evaluations of these companies will continue to be suppressed even if interest rates go sideways from now on, this is shown in this chart, where we are showing the valuation backdrop of IT stocks compared to interest rates. So we have another. If we look at the amount of tech stocks that is included in the benchmark, we have a slide for that, that is showing that the percentage of tech stocks in the benchmark is still significantly higher than it has been even at the peak of the NASDAQ bubble. it is higher than what we have seen at the beginnings of the earnings season when the energy stock bubble was higher than financial stocks were doing the housing bubble of 2008. So if rates keep staying high for longer, that will keep pressure on this growth in tech stocks especially, and low volatility strategies that tend to have very moderate exposure to these type of companies will do well. And on the other hand… >> Goldilocks would mean two scenarios. That's one scenario. What's the other side? >> The other side is, what if inflation comes down sharply? We have seen inflation that almost reached 10% in the US. It was 9.1% in the summer. It's coming down, but the question is how fast and how low will it get? And if we expect it to go down to 2% in this quick manner, it means that unfortunately, the growth will be accelerated sharply. That would meanhigher unemployment rate, slower wage growth and weakness in corporate earnings. that is why we say we are in a Goldilocks area. >> With the way the market behaved this year with all of the challenges in front of them in the central bank action, obviously investors seek return over the long term. In the short term, there has been discussions this year just around the preservation of capital, given some of the stuff was on the market. A low volatility strategy, how does that work with those kind of concerns, if you want to preserve some capital? >> Yes, exactly, it's a very good question. If we look at the whole philosophy behind the low volatility strategy working over the long term by preserving capital is, you know, we can visualize it by looking at the start here. If we have an investment that is going down 50% in a period, because we all can face a situation where an investment goes wrong and we are down 50%. In order to recover that, we need a 100% return of that, you can see in a green bar, almost 100% of that to recover the money lost. However, if we reduce the downside, if we don't experience a sharp drop down of our initial capital, the recovery time and the recovery amount is significantly less. So if we continue with that pass when we don't have big drawdowns, the power of compounding will allow the generation of significant returns over time by avoiding this type of big drawdowns in the market. >> An investor perhaps intrigued by your perspective, where they begin their homework? They want to start explore and low volatility strategy a little deeper, what should they be looking at? >>they tend to invest in lower risk sectors. Their low volatility year stocks in every sector, we can talk about that later. But generally, it is a lot easier to find low volatility stocks in the consumer Staples, in utilities or telecoms rather than you find them in more economically sensitive industries, such as materials, energy or industries. >> Fascinating stuff and a great start to the program. We will get your questions about low volatility stocks for Emin Baghramyan in just a moment's time. A reminder, of course, you get in touch with us anytime. Email moneytalklive@td.com or fillet the viewer response boxer right here under the video player here in the book. Now to get you updated on some of the top stories in the world of business and take a look at how the markets and trading. Home Capital Group says it expects softer housing market conditions to continue in the near term. The alternative mortgage lenders are reporting a nearly 29% decrease in net incomefor his latest quarter, compared to the same period last year. Home Capital Group says the housing market is in a period of transition as buyers and sellers adjust to higher interest rates. Maple Leaf Foods has revenue was up almost 4% year-over-year on stronger demand for its meat products. Those gains countered slower sales in the company's plant protein business. And they believe is booking a non-cash impairment charge of some $190 million connected to the plant protein group. Shares of lifter in the spotlight today. That after the ridesharing company reported weaker than effective revenue and active writer numbers for the most recent quarter. Lyft also says ridership still below pre-pandemic levels. That's an pretty stark contrast to its rival Uber, which recently said its passenger numbers are have actually recovered and moved higher than before the pandemic. It will check on the main industries, starting here at home with the TSX Composite Index. it is US midterm election day. A lot is at stake politically, but as investors, the composition of the next Congress. We will get more information about that later tonightand in the wee hours. We'll talk about that later in the week. Up hundred 67 points on the TSX, shy of 1%. Since the border, the S&P 500 is in rally mode. Right now, up 47 points, 1 1/4%. We are back now with Emin Baghramyan. We are taking your questions about low volatility stocks. Let's get to them. He is one of the platform. Which sectors are traditionally favoured by low volatility strategies? >>The most favoured low volatility via sectors would be consumer staples, utilities, telecoms, financials. There are some industries that tend to be less economically sensitive, relatively, like insurance versus banks and henceforth. and it also depends on the universe, obviously. It is one thing to look for a low volatility stocks in healthcare stocks in the US versus in Canada because Canadian healthcare sector, for example, is overrepresented by cannabis producers, they tend to be a lot more volatile wares in the US you have a lot more sophisticated developed of pharmaceutical industry, medical device industries, etc. In the US, investing in healthcare, that would also be a low volatility favourite sectors. > US health care is interesting in the sense that it could be a part of a low volatility stocks you. Obviously, it's a lot different than the composition of our healthcare stocks. I think that sometimes there is political riskthat gets associated with US healthcare. Depending on the election cycle. We are in midterms right now. That's a one-off event every couple of years apart which allows the US healthcare stock to be a low volatility play? >> That is why healthcare stocks are considered to be one of the main defensive sectors. They tend not to be the most low volatility sector because of the volatility premium that you occasionally get by the, you know, drug pricing issues that are facing the industry or other types of political events that are hitting. so it can be defensive, can be a low volatility sector, but it's not the mostlow volatility favourite sector. So there is significant exposure in it but it is not number one. And within healthcare, it's also quite a bit different if you look below the surface. You have biotech companies that tend to be a lot more volatile compared to, let's say hospital operators which tend to be a lot more stable revenue streamsand more fitting and suitable for low volatility investing strategies. As you mention consumer staples as well. I think of groceries as a more complicated matter. People are telling us food, and good times and bad times, people are still hungry. >> Yeah, the grocers, the food producers, the drinks producers, the soft drinks industry, those are, even the supermarkets, even the super megastores, a lot of those that tend to be… Consumer dollars will still flow their regardless of the state of the economy and to put that in comparison to major consumer discretionary stocks, you can see the difference where if the economy weakens, people are worried, the first thing cut our on things like vacations while they continued to go to the grocer, so that's why you can find a lot more low volatility stocks within consumer staples, within groceries, especially Canada too. >> Let's take another question. Obviously people are concerned about inflation out there and interest rates. So how do you low volatility stocks perform when interest rates are going up, as they are right now? >> Yeah, so one of the widely used criticism of low volatility strategies is they are like bond proxy. They have lowball equities. They should perform really poorly when interest rates are going up. However, we look at that and historically, there is no evidence of that. And if you look at the period since 1980 till 2020, in that time, interest rates were going from 20% almost here. >> And that's the only world to most people know, right? >> Yeah, the past 40 years, and low volatility benefit from declining interest rates and outperformed its peers, by about 1.5% annually to the benchmark. However, there is another. We can look at before that, from 1953 all the way to 1980 where interest rates were steadily rising for about 28 years. And if welook at low volatility equities and compared to the benchmark, we can see that low volatility equities performed in that environment as well. So there is no evidence that, in the long run, interest rates would hinder the performance. Actually, what's interesting, during this period, low volatility stocks actually benefited tremendously from spiking interest rates in relative performance terms because it's not hurting the tech stocks sharply as soon as the inflation took off, forcing these companies to underperform and given that low volatility has very moderate exposure to tech stocks, it allowed it to outperform. To the relationship is not as strong as many people believe. >> Really interesting stuff. Let's get to another question from a viewer. Among the cyclical names, such as energy or industrials, can we find a low volatility plays there? >> Well in energy, it's a lot harder to find given that to energy tends to be correlating withoil. So it's hard to find a lot of low volatility names in the energy sector. However, it's not impossible. For example, if we look in Canada, we have the pipelines, in North America, we have the pipelines which tend to be more like utilities rather than energy, but they are correlated to whatever is happening in the energy sector, so it's a very low volatility exposure to the energy sector. Another interesting ways to do it, their Middle Eastern companies that tend to export energy and even though you can buy their telecom, national carrier or one of the largest banks that create synthetic exposure to energy or Norwegian companies that tend to be via currencies or the revenue stream somehow a lot more correlated or in sync to what's happening in energy and oil prices. Our portfolios have a lot of those type of names. You can have a developed market refinery company that has a… Conditions, environment in its domestic market and also very much tied to developments in the energy sector. So that's what I can say. There's not a lot of drillers or shell producers, exporters… >> It's very economically sensitive. >> Yes, if anything happens to oil, and we seen oil from going from 150 to $-30 even in the past 15 years or so. So it's a very volatile variable and it impacts the volatility of earnings of energy companies, it impactstheir stock prices, hence they are not suitable for low volatility portfolios. In industrials, it's very interesting because it's a very broad sector. It has many components in them. There is a lot of Japanese capital producers. We have exposure to that in our global low volatility funds. In North America, we have the waste management companies that are industrial companies. But then again, people still need someone to take the garbage away, so that's an exposure to that sector. And in Europe, we have this commercial services provider that tend to be in the industrial sector two. We have exposure to that too. > Interesting stuff. We are going to remind you, always make sure to do your own research before you make any investment decisions at home. We will get back to your questions for Emin Baghramyan on low volatility stocks in just a moment's time. A reminder, of course, you can get in touch with us at any time. Just email moneytalklive@td.com. Not get to our educational segment of the day. If you are looking to research different types of GICs as a possible investment, WebBroker has tools which can help. Joining us now with more, Bryan Rogers, senior client education instructor at TD Direct Investing. Alright, let's dig into the benefit… Sorry, I think I'm jumping the gun there. Why don't you take it away and then I will follow-up with a question? >> All right. Well, with interest rates rising, one of the things we seem to be seeing is a renewed interest in GICs. For those investors that have never purchased a GIC, they may be surprised to see that there is quite a wide variety to choose from. Or those who have worked with a bank in the past for investments, mutual funds are GICs, there is usually pretty narrow variety with the banks. So we do jump into WebBroker, we can see under our research and investments. So we go out here, under research and then research investments, you can go to the GIC Rate Sheet. And because you are a self-directed broker, you can see that there is a choice of some short-term GICs that are all TD base. There are some US ones and different TD businesses that are the issuers. But once you get into that little bit longer term, the one year, two year and so on, if you notice that there are tons of different companies that you can select from. We have eight in BC, equitable bank and all these different issuers may have a different rate and you can choose. So if you go down even from a big range right now, you can see we have about 3 1/2%, a little over 3 1/2% for Canadian tire bank at the bottom, up to the top rate of HSBC with4.35. You can get a better rate and not put all of your eggs in one basket. >> Now and ask you a follow-up question on those thoughts. Aside from the choice of rate, any benefit from having variety of GICs available? >>yeah. If we jump into WebBroker here one more time really quickly, we can see that with these other companies, and else grow down a little bit further, we have that one year, two year, three year, I did say that there is that choice, you're not putting all your eggs in one basket. But on top of that, those of you who may have never heard of CDIC, it's the Canada Deposit Insurance Corporation, it's a Crown corporation that protects your cash, so not necessarily a super liquid assets but it may be or GICs, but they do qualify within that area in saving accounts, checking accounts. You can have a GIC, a term deposit that is covered up to 100,000 per issuer. So if you are using this in your self-directed account, you can actually have $100,000 and one, $100,000 and another issuer and so on. You can have multiple issuers in the one same account and be protected at a much higher level if you are using these in different GICs. >> An important point with the CDIC insurance there. Thanks for that. > Thanks, Greg. >> Our thanks to Bryan Rogers, senior client education director at TD Direct Investing. Make sure to check out the learning sector on WebBroker for free educational videos, live interactive master classes and some upcoming webinars. Before I get back to your questions about low volatility stocks, a reminder of how you can get in touch with us. Do you have a question about investing what's driving the markets? Our guests are eager to hear what's on your mind so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. just writing your question and hit send. We'll see if one of our guest can get your question answered here. we are back with Emin Baghramyan taking your questions on low volatility stocks. This came in off of the plat form. Would REITs qualify as low volatility? >> Yes, they would. they are composing significantexposure in our portfolios. >> That's interesting, because REITs involve a lot of things. We talked about consumer staples earlier. Grocers, you can have rates of focus on the properties where the grocer is located, but then you can have warehouses and industrials, office space. If someone is looking at the REIT spaces low volatility, what do they need to consider in terms of who that REITs actually collecting rent from? >> Just like in any other sector, You can have high flyers or companies that tend to be a lot more volatile compared to the others,and generally, the low volatility stocks he would get you exposed to the lowest volatility was in that sector as well. Most of them, they tend to be, like you said, where houses compared to apartment REITs which tend to be more cyclical. This ties back to the economic cycle. If you have a company that can navigate choppy waters more calmly, those are the type of companies that you want to get your exposure to within that sector also. So within REITs, you can find a lot of Low volatility stocks. >> Another question off the platform. Can low volatility stocks be good for income investors? The schema when you're talking about pipelines. There is the dividend yield as well. >> Yes, indeed. So the short term answer is that given its higher than benchmark dividend yield, given what kind of company invest in those companies that have steady revenue streams, they tend to have higher dividend yields and therefore the low volatility funds tend to have higher than benchmark dividend yields and that is why it's good for people who seek out a bit higher incomes. But also, in a long run, low volatility has its basin people who try to have the exposure to fix in, or equities and a more balanced approach, and you want to have some exposure to low volatility equities as well, given how little correlation has with equities and fixed income. For example, this year, we see the NASDAQ down 30%, the S&P 500 down 20%. In the meantime, bonds are down also quite a bit in the high teens. Meanwhile, low volatility stocks were able to withstand this very negative environment and people who seek out income and they seek out their long-term mix of assets, they should always have some exposure to low volatility equities. >> When it comes to that yield, do investors sometimes overlook what that is contributed to their portfolio? I think in the sense that we get caught up as investors in the data day or week to week or month to month, pretty dramatic moves this year so far in equities, whether they are up or down, do investors sometimes forget about the yields they are getting paid? If it is a dividend paying stock and how that sort of reacts long term to what you're trying to do, grow wealth, obviously. >> Yeah, so there's a lot of academic studies that have shown that the companies that tend to have steady dividends and growing dividends and they never cut their dividends, they tend to have brighter prospects and there's a certain interest. So in low volatility investing generally, here with TD Asset Management, weknown to only invest based on dividend yield. We look for stable profile, low volatility, good returns and by its result is they tend to have a higher dividend yields. >> Will get to another question. one of the things to avoid when choosing a low volatility stocks? > We are big proponents of diversification, first of all. So even if you think a company is a low volatility stocks, you don't want to put all of your assets into one basket. You should have a well diversified portfolio of low volatility stocks because a company's fortunes can change dramatically. We have seen frauds, even among low volatility companies that tend to have regulatory changes like we touched about in the healthcare sector, we can have these kind of situations. Therefore, one of the things to avoid is making sure to ensure that your overall investment is well diversified. >> Actually, question just came in off the platform which is a follow-up to this if we are talking about what to avoid when choosing a low volatility stocks, what's the negative side of investing in the space? >> Well, the negative side is that it is not very exciting. People tend to be enamored by the companies that are in the headlines, they are generating a lot of social network activities, everybody's talking about them. No one really gets excited about utility companies. But the companies that tend to be, you know disrupting or how promising technology or promising drug. But unfortunately, the majority of those are not successful. We see them and we only face the eventual winners of this competition and a lot of the investment capital gets destroyed in the process. So that's the main negative, I would say, that it's just not that exciting for a lot of people, but it does the job of preserving capital and generating will for its investors in the long term. >> Interesting stuff, we are going to get back to your questions for Emin Baghramyan and on low volatility stocks in a moment. Make sure you do your own research before you make investment decisions. A reminder that you can touch with us at any time. You have a question about investing or what's driving the markets? Our guests are eager to here what's on your mind. So send us your questions. There are two ways you can get in touch with us. It you can email us any time at moneytalklive@td.com or you can use the question box under the screen on WebBroker. Write in your question and hit send. We'll see if one of our guest can get you your answer right here at MoneyTalk Live. >> Americans heading to the polls today for the midterm elections determining control of the Congress. Polling data is suggesting we may get a Republican majority in the House and Senate, resulting in the split government with Joe Biden still the Democratic president. Anthony Okolie joins us now to tell us what TD Securities is looking for in all this. >> TD Securities, their base case outlook is for a Republican-controlled House and Senate alongside the Biden presidency. A divided government should not be market moving per se, but it does suggest gridlock and as both Democrats and Republicans posture ahead of the 2024 election. It's unclear whether Republicans will work with the White House but as TD Security says, gridlock is only good for risk assets. This is because gridlock lowers the chances that meaningful legislation code work its way through Congress and be approved and bills that do pass tend to be watered down through their legislative process. Of course, lack of political action and meaningful legislation historically tends to be benefiting equities because it gives corporations less to worry about and it also enables businesses to make growth plans without a higher level of confidence. Sweeping legislation can increase uncertainty for businesses and potentially scare away investors. Now, TD Security is notes that a lack of action in Washington may be negative if the US economy is slow significantly. TD Security thinks that the Fed will be constrained and unable to move away from their aggressive interest rate policy because of stubbornly high inflation. But the absence of physical stimulus from a divided government could potentially help to bring down inflation over the long term. Now, finally, TD Security says that the debt ceiling negotiations could become more difficult in a divided government. Political gridlock, according to TD Securities, suggest that when the debt ceiling reaches the third quarter of next year, a resolution might not be found quickly and that could create more market volatility. >> In the mix of everything happening there, it is complicated, you mentioned the Fed and what TD Securities thought about what they would be able to do. What if inflation stays elevated and they are not winning the battle? >> If inflation stays elevated, TD Securities thinks Congress may take issue with the Fed's inability to bring inflation under control. It would be a highly volatile bipartisan environment. Congress may also target the Fed for generating negative income as it pays more interest to banks and money market funds. TD Security says say that the Fed running at negative net income due to this is unlikely to impact monetary policy. > Fascinating stuff. Thanks, Anthony. >> My pleasure. >> MoneyTalk Anthony Okolie. Let's check out the market action. We will start on Bay Street with the TSX Composite Index. We are seeing money move into risk assets, up a decent 169 points, almost a full percent, 19,715. Seeing the US dollar take a breather and stepping back from a pretty aggressive upward move throughout the year, we have gold moving higher as well. However, there are interesting things happening. Let's check in on Hudbay Minerals. The price of gold moved higher. We are seeing some movement into some of these mining names today. Hudbay is up 2. 4%, $6.77. We have gold at about 35 bucks. Interfor, some weakness in the lumber plays in Canada today, Interfor at 23 bucks and $0.63 per share, down about 5 1/2%. As Americans had to the polls, the S&P 500, the broader read of the American market, is in rally mode. Hanging in there with 47 points to the upside, 1 1/4%. Tech stocks are rallying today, it's been a tough couple of weeks, a tough year for the tech stocks. Hundred and 43 points, 1 1/3%. Not so for Lyft, coming out with their earnings, disappointing, basically saying we haven't been able to recapture the pre-pandemic levels of ridership, even though their rival Huber announced last week that they have reached a higher than pre-pandemic level ridership. They are down more than 20%. We are back with Emin Baghramyan from TD Asset Management, take your questions about low volatility stocks. If we had a recession, what would it mean to these low volatility stocks? >> Yeah, so, it is quite possible now, given that the amount of monetary policy tightening we have seen recently that we are heading into a recession, and to understand how can low volatility performed during that period, we went back and looked at the data. We went and looked at every recession since the 1960s. We measured the performance of the low volatility stocks, six months before and after the start of the recession. Here on the slide, you can see T -6 is six months before, it's he is the recession. If we go into a recession in six months, this chart can help us how low volatility performed, whether it preserves capital or not. The darker line is the low volatility performance around that period, and the other one, the bright green, is the market performance. We can see that in the year around the start of the recession, we can see low volatility preserves capital and on average, declines about 0. 7%. Meanwhile, the benchmark on average historically has declined by 7%. so in that environment too, it's a very good tool to navigate the choppy waters of upcoming possible recession. >> Interesting set. Let's get to the next question. Lots coming in. Lots of interest in the topic. Are there any low volatility plays in the commune occasion sector? >> The communication sector has a lot of low volatility stocks because it composes of the traditional telecom industry that used to be a stand-alone sector. Now, in addition to it, that got changed and added to it, the Internet stocks that were reclassified from information technology stock into the communication sector, that is why things became very different in that sector. On the one hand, we have traditional telecoms, almost all of them are low volatility stocks,and on the other hand, we have these Internet stocks that are almost entirely and not low volatility stocks and they are a lot more trading in sync with the IT sector. >> If you're in that space, maybe south of the border, I think many the platforms, the parent company of Facebook might have been thrown in with the communications group a few years ago and that isn't a name that has escaped all this volatility. Is that the real demarcation point? If I'm saying I'm interested in the low volatility, would you even look at a tech company or social media company? >> We don't do investing based on what type of companies, we are agnostic to that. We are looking at its objective characteristics. If that company, it doesn't matter what it does, if it turns out to be a company that has low volatility, has stable returns, the things were looking for, it would be included in our portfolio. And if it turns out to be a social media company, it might have been, but to be fair, we don't have one yet, but eventually they might mature and become a company that is very… Become a stable type of thing that people will continue to spend their money on over a long time and their historic return profile will fit and they will possibly get included in our funds. >> We are out of time for questions but obviously a lot of interest in our audience on the topic. In general, so taking a look at the low volatility space, what did they need to keep in mind in times like these? >> First of all, diversification. Think about higher dividend yield, think about capital preservation, the ability of this strategy being a capital preserver, generating higher returns per unit of risk taken then the traditional concentrated benchmarks. It has very diversified, if you look at the Global Fund, regionally, if you look at a country specific ones by sectors or industries, it's a low correlation with traditional major asset classes that can be very handy in times like this. It's very low correlation with fixed income, it's low correlation with equity markets. That is the very useful qualities of global literally equities. >> You mentioned earlier to that one of the risks of the space, one of the potential downsides is the fact that these aren't the most seductive names out there. It is sort of a patient strategy? You've done your homework, major decisions and then you live with them for a long time to see returns instead of waiting for the big moments? We get so much excitement with other names. >> Yeah, indeed. If you look at the data going to almost 100 years in the US and Canada and even we look at the global markets and if we divide the space, the universal companies into different volatility buckets, if we look at the ones that had the lowest risk in one bucket and it has a bit higher risk and the second bucket etc. , we measure the performance of these buckets through time, we can see that investors are not compensated if they get exposed to the most volatile bucket. And if they simply don't have any exposure to these buckets and they are concentrated their capital into the first few buckets that have the least risky companies, they tend to have the same or even higher, similar than the overall market returns but without taking unnecessary risk in helping them to generate higher returns over the cycle. >> Fascinating stuff. Really enjoyed the conversation. Thanks for joining us. >> Thanks very much for having me. >> Are things to Emin Baghramyan, lead Portfolio manager for global low volatility equities at TD Asset Management. Stay tuned, tomorrow on the show, Michael Craig head of asset allocation at TD Asset Management will be our guest, taking your questions about asset allocation. We'll probably have something to say off the top of the show about these US midterm elections. You don't want to miss it. You can get a head start with your questions. Email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow. [music]