SIC Multi Asset Institutional Composite
|December 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
Despite concerns that the highly contagious Omicron variant might disrupt future economic activity, global equity markets posted strong results coming into year end. European and US equities led the way for the month – returning 5.65% and 3.54% respectively. Ironically, the Canadian bond index also advanced in December despite investor worries about accelerating price inflation and possible central bank tightening.
For December the SIC Multi Asset Institutional Composite returned 2.75%. Results were in line with the benchmark for the month but continued to trail on an annual basis. Our decision in Q4 to hedge the US equity allocation was the primary reason for this 60 basis point underperformance. Oil and natural gas commodity prices are expected to remain strong in the first half of 2022 as a result of robust global demand. This, in turn, should strengthen the Canadian dollar. Under these circumstances the Canadian dollar hedged US equity allocation will be accretive to portfolio returns in 2022.