SIC Multi Asset Institutional Composite

 

October 2018

Year to Date

SIC Institutional

-4.5%

-2.5%

Benchmark*

-3.9%

-0.6%

* 5% T Bills, 35% Canadian Bond Composite, 20% TSX Composite TRI, 20% S&P 500 C$ TRI, 20% MSCI EAFE (Net) C$ TRI

 

Global equity returns were hit hard in October as investor concerns over the possible economic impact of trade tensions between the US and China took centre stage.  At the same time, widespread profit taking among the heavily-weighted US technology stocks (FAANG) added to the downward pressure despite decent quarterly earnings reports.  Moreover, no relief was provided by the fixed income allocation as central banks focused on continued interest rate normalization – raising short term interest rates and shifting the entire yield curve upward.

As the table above illustrates, the SIC Multi Asset Institutional Composite continued to trail the benchmark.  The last time that we experienced such a sharp monthly decline was in September 2011, although bonds provided some cushion in that particular sell-off.  We see the YTD 2018 price decline as a correction within an ascending global equity market rather than the start of a new bear market.  Consequently, future monthly portfolio returns should be accretive and mostly dependent upon our equity allocation.

 

Terry Shaunessy
James Garcelon