SIC Multi Asset Institutional Composite
|July 2021||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
Global equity and bond markets continued their uptrend in July supported by a powerful post-COVID economic and earnings recovery. The major central banks remain accommodative and have recently gone to some lengths to reassure investors that near term monetary tightening is not in the cards. Further fueling markets.
Once again, the US equity market led global performance with Canada marking time as energy investors took profits. The Emerging Market Index was the big surprise for the month – declining by 6%. Recent Chinese Government policy pronouncements with respect to local technology and social media companies were regarded as intrusive which, in turn, spooked investors. Our 5% allocation to Emerging Markets was in fact responsible for the SIC Multi Asset Institutional Composite’s slight underperformance relative to the benchmark for the month. However, we do not believe that the mid to long term appeal of Emerging Market equities has been compromised by Beijing’s attempt to manage the influence of technology and social media on its domestic political goals.
The other major concern for the month was the rise in COVID infections stemming from the Delta Variant. In view of the high and growing vaccination rates worldwide, however, we do not see the Delta Variant as sufficient to derail the global economic recovery. Fixed income markets have rallied strongly in recent weeks. We will likely further reduce the duration of our bond allocation to mitigate the rise in interest rates expected later this year.