SIC Multi Asset Institutional Composite

  April 2019 Year to Date
SIC Institutional 2.4% 11.0%
Benchmark* 2.2% 10.2%

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

Global stock markets performed well in April as US equities continued to lead the way.  A more dovish US Federal Reserve underpinned positive investor sentiment that higher administrated interest rates were not in the cards.  Consequently, the “buy button” was hit and major stock indexes moved to (or above) all-time highs.  Performance for the SIC Multi Asset Institutional Composite was slightly above the benchmark for both the month and on a year to date basis.  Our overweight in equities relative to fixed income continued to be supportive.

In April, we moved to improve the credit quality of the fixed income allocation by selling the US Investment Grade Bond Index ETF and replacing it with a US Aggregate Bond Index ETF.  More than half of the US Investment Grade Bond Index is now represented by individual issues that have the lowest rating for investment grade (BBB).  It would not take much of a set-back in the credit market for these bonds to be downgraded, which could jeopardize the stability of this holding.  Current spreads between investment grade bonds and the bond aggregate do not justify the additional credit risk. 

We will reduce equities by 5% at the beginning of May as recent appreciation leaves little room for error in the investment outlook.  Global trade issues including the ratification of the USMCA remain unresolved and a poor outcome could spark a sell-off from current record levels.      

Terry Shaunessy
James Garcelon