SIC Multi Asset Institutional Composite

  May 2019 Year to Date
SIC Institutional -3.2% 7.5%
Benchmark* -2.1% 7.8%

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

In May, global stock markets were unnerved by the US and China’s failure to reach a trade agreement and the subsequent escalation of economic tensions between the two superpowers.  Adding to the confusion was the bizarre threat last Friday from the White House to impose tariffs on Mexico starting June 10thas punishment for illegal immigration along the southern US border.  The imposition of Mexican tariffs immediately called into question the ratification of the USMCA deal, which is currently under legislative consideration in all three countries.  With this as the backdrop, investors collectively hit the sell button on economically-sensitive equities and stampeded into bonds pushing down interest rates to new 52-week lows.  

Our emphasis on export sensitive international markets hurt our May performance and brought our overall year to date performance back in-line with the benchmark.  While the near-term trade picture is murky, we have not repositioned our equity allocation in anticipation of trade failure.  We think that common sense, self-interest, and President Trump’s track record of flip-flopping on major issues will successfully bring all parties back to the bargaining table.  The bottom line – we believe bonds are historically overpriced while with respect to equities, cyclical sectors and regions are ridiculously cheap.    

Terry Shaunessy
James Garcelon