Charles Lannon – Toron AMI
September marks the one year anniversary of the successful launch of the NexGen Global Equity Funds. Apart from a slight hiccup in Q1 2014, global equity markets have had positive returns in this time, although the rate of return thus far in 2014 is unsurprisingly more modest than the torrid pace of calendar 2013, wherein the MSCI World Index of global equities returned 36% in Canadian dollar terms. The reasons for the positive return of the Fund and global equities during the past twelve months are fundamentally identical to those that have driven this bull market since 2009: Global economic growth continues to accelerate, and should reach at least 2.5% in 2014 – a weak figure, but materially better than the 2012-13 result. Global equities, at 15.5 times 2014 earnings, remain reasonably valued on a historic basis, and offer their dividend yield of 2.5% which is well above the yield available on either cash or bonds. Fears of another post-Lehman meltdown, be it in the form of a run on European banks, the inability of the U.S. government to finance itself, or the dissolution of the European Union have all proven to be wildly wide of the mark. This latter point serves to remind investors that an excess of bearishness can be every bit as detrimental to the attainment of their financial objectives as an excess of bullishness!
To read more about the impact of the global equity market on NexGen’s Global Equity Funds, click here.