More than three-quarters (77%) of Canadian investors feel that market volatility is the new normal and is here to stay for the foreseeable future, according to a study issued by BMO Global Asset Management.

When asked to identify their top priorities when deciding how to invest their money in the current market environment, almost all (96%) said that balancing risk in their investments is critical. Other factors included:

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  • The long-term rate of return (95%)
  • Diversification (86%)
  • Short-term rate of return (72%)

Paul Taylor, CIO, Fundamental Equities, BMO Global Asset Management, said: "Factors such as stretched but still reasonable equity market valuations, the withdrawal of monetary policy support and ongoing liquidity strains in emerging markets lead us to believe that volatility will continue to characterize the financial markets for the next 12 to 24 months."

Mr. Taylor noted that investors should be aware that returns are likely to moderate through 2014 and there will be further volatility in fixed income markets as the Fed’s QE tapering program unfolds throughout the rest of this year.

Robert Armstrong, vice president and head of Managed Solutions, BMO Global Asset Management, said: "Navigating volatile markets can be challenging, so it’s critical that Canadians seek out investing solutions that help them diversify their portfolios and effectively manage risk."

Armstrong added that as an increasing number of Baby Boomers – defined as those born between 1945 and 1964 – approach retirement, it is important for them to focus on reducing risk and take a more conservative investing approach to preserve their nest egg.

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The study also examined if investors feel that they require help with selecting investments given current market conditions:

  • Eighty per cent said they could use assistance finding their ideal investment risk level.
  • Eighty-five per cent reported needing help finding investments well suited for their risk level.
  • Not surprisingly given these findings, 86 per cent stated that they would use an investment portfolio designed specifically to maximize returns for their given risk level.

Armstrong suggested that those who are seeking investment options to match their current age, life stage and risk tolerance should consider offerings such as BMO SelectTrust Portfolios or BMO ETF Portfolios. These fund solutions offer a series of six risk-differentiated options, including fixed income, security, conservative, balanced, growth and equity growth.

Armstrong added: "It doesn’t matter if investors are conservative, bold or somewhere in between, nor if they’re approaching a key life event. There is a portfolio option available and tailored to their needs."