Balanced Fund Commentary – Q4 2018

Market Commentary

Global equity markets declined sharply in the fourth quarter ending a very volatile year. Fixed income investments rose in value as longer-term interest rates declined. In 2018, the “Loonie” depreciated versus the US dollar (Q4: -5{a4bc595f5bf22b450fc57725bbb5a349cea6d8af0e21f99fc8d20f6b7000a772}, 2018: -8{a4bc595f5bf22b450fc57725bbb5a349cea6d8af0e21f99fc8d20f6b7000a772}). This depreciation increased the returns of Canadian investors who owned US equities & didn’t currency hedge.

Financial markets have been strong in recent years and volatility has been low. 2018 was a rude awakening for many investors.

It’s important to remember that financial markets are driven by different influences in the short and long term. At times, financial markets will be too optimistic and other times, they will be too pessimistic. The key drivers are:

Short term – sentiment & human behaviour

Long run – valuations & economic fundamentals.

Key Themes

In the second half of 2018, the focus on the following issues became elevated:

  1. Partial US Government Shutdown
  2. US-China Trade Dispute
  3. Brexit Next Steps
  4. Slowing Global Economy

1, 2 & 3 are issues that will take time to work out. The global economy is slowing, and market pundits are arguing a recession is imminent. All indicators right now point to slowing growth where equity markets can still increase.  

Key Benchmarks

Fund Details

Fund Returns