Great West Lifeco

GWO-T

All lifecos have underperformed. GWL has great assets in Canada, but Putnam Investments in the U.S. has been a drag on them. That said, lifecos are steady and will benefit from rising interest rates. She prefers others in this space.

He owns Prudential instead. Should be a terrific time to own an insurer, but it’s not. Flattening yield curve is hurting them. Would wait to see movement in the long rates before buying. US should kick rates higher, which should help. Own the banks, which automatically benefit from growth.

A sideways pattern where you buy around $32 and sell near $37.

You expect all lifecos to do well on a rising interest rate environment. It is surprising that we haven’t had the big trade on the lifecos. He will gravitate toward banks more than lifecos now. He feels uncomfortable with the group at the moment.

At these levels he is predisposed towards lifecos. They underperformed the market, but things are setting up better for them with rising interest rates. He prefers Manulife Financial Corporation (MFC-T) but both are good long-term investments.

This is a good space. High dividends. Growth. Positive demographics. Doesn't know GWF as well as Sunlife or Manulife, but should get moderate to strong returns.

Having a multiyear low in long-term interest rates last June, this is likely to creep higher for many years. Looking at insurance companies, rising rates are good for them. Being in a pretty good equity market, equity returns help the insurance industry. It’s a group he is quite interested in, and they could do well for many years. If he had to pick a Canadian insurer, he would probably pick Manulife (MFC-T) as the leader in the group. Technically it is acting the best and has a great global footprint with great growth in Asia. We are in a bull market, so you don’t want to buy a company that is not going up yet.

The most conservative of the 3 lifecos in Canada. A lot of their business is more utilitarian, and they don’t take some of the risks the others do. As a result, they perform better across negative markets, but the leveraged companies have been doing better. They bought Putnam Funds in Boston, and have had difficulty getting that turned around. With Power Financial (PWF-T) you get this company at a discount of about 17%. He would use Power Financial instead.

GWO-T vs. MFC-T. MFC-T has the advantage of being a very diversified company, globally. They have done well from that diversification. He tends to prefer it to GWO-T, although he might use its weakness to buy.