Anthony Layton MBA, CIM

Chairman & CEO, Portfolio Manager

Peter Guay MBA, CFA

Portfolio Manager
  • T514.875.7566 x 224
  • 1.800.875.7566
  • F514.875.9611
  • Place Alexis Nihon
  • 3400 de Maisonneuve Ouest,
    Suite 1501
  • Montreal, Quebec H3Z 3B8

Market Commentary

June 23, 2015 - 2 comments

After a strong start to the year in January and February, markets have leveled off in the last few months. For the first five months of 2015:

  • Short bonds in Canada returned 1.9%;
  • Other Income securities (REITs, Utilities and High Yield Bonds) returned 3.1%;
  • Canadian stocks rose by 3.8%;
  • US stocks returned 11.3% in Canadian dollar terms, with the majority of that appreciation coming from the rise in the US dollar;
  • International stocks gained 17.4% and Emerging market stocks returned 14.0% in Canadian dollar terms.

In light of these strong returns, we have been rebalancing portfolios in the last few months with a focus on the following:

  • We have taken profit on US stocks to bring all clients back down to their policy weight;
  • We remain over-weight in International equity and Emerging market stocks, which has benefited all portfolios;
  • We have mostly replenished bond allocations to make portfolios safer;
  • We have reduced exposure to Other Income to reduce sensitivity to interest rate fluctuations.

Portfolio returns to the end of May range from 4.5% to 8.5% depending on each client’s risk profile.

While the financial media speculates about the next stock market downturn, it is important to remember that stock markets are inherently unpredictable.  Rather than try to time the market, we focus on the elements we can control – managing your asset allocation and rebalancing to stay true to your plan.

By: Peter Guay with 2 comments.
  10/08/2015 11:01:03 AM
Peter Guay
@Grant, Tony and I do use Robert Shiller's (Yale University) price earnings ratio to modestly bias our portfolio weightings. This is not a short term market timing strategy, rather, it helps to put the odds in our clients' favor over the long term. It has been shown to influence up to 40% of the future 10 year return on markets, according to Vanguard.
  30/07/2015 10:38:52 AM
Peter, could you elaborate as to why you have rebalanced US equities, yet remain "over weight", i.e. not rebalancing international equities? Is this not market timing wrt to international equities?

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