SIC Multi Asset Institutional Composite
|January 2020||Year to Date|
* 5% T Bills, 35% Canadian Bond Composite, 20% S&P TSX Composite TRI, 20% S&P 500 C$ TRI, 20% MSCI EAFE (Net) C$ TRI
The “Jekyll and Hyde” nature of global capital markets was once again in full view during the month of January. During the first three weeks, new highs were a daily occurrence for most global equity indices. Investor optimism was buoyed by benign central bank interest rate policy, a robust US consumer and the hopes that synchronized global economic reacceleration would be a feature in 2020. However, the good vibes were not to last as the “Coronavirus Panic” overwhelmed individuals, governments and corporations. This led to the quarantining of cities on an unprecedented scale, suspension of certain international air travel and a general cessation of global trade. As a consequence, investors fled both international and economically sensitive equities for the safety of bonds. The result was that bonds, unbelievably, were the best performing asset class for the month with a whopping 2.9% return. We were unprepared for the 180 degree turn that occurred over this two- or three-day period at month end and as a result the SIC Multi Asset Institutional Composite underperformed the benchmark for January. As with all extraordinary disruptions (natural disasters, wars, strikes, etc.), we expect markets to recover and to be led once again by international and economically sensitive sectors. Apart from rebalancing we have no plans to change our basic strategy of underweight fixed income and overweight non-North American equities.