Natixis Canada Blog

Month: May 2015


Bargain Hunting Results in Noticeable Rebound in April

Jeff Herold
Jeff Herold, J. Zechner Associates, Lead Fixed Income Manager

The preferred share market appeared to hit bottom in April and then it began to recover. In the first half of the month, the prices of rate reset issues extended their losses for this year, falling almost 4% on average. The selling pressure appeared to be the result of negative articles about preferred shares in the financial press and concerns about the lower dividend rates of issues that reset in the next two years. In the second half of the month, though, bargain hunting by investors sparked a noticeable rebound. On balance, preferred share prices finished the month only slightly lower than they began. The S&P/TSX Preferred Share Index returned -0.36% in April.Read More…

April Sell-off Negatively Impacts Bond Markets

Jeff Herold
Jeff Herold, J. Zechner Associates, Lead Fixed Income Manager

The Canadian bond market treaded water in the first half of April, but declined with increasing intensity in the latter half of the month. In large part, the pullback reflected a global bond selloff, with European bonds leading the way down. As well, it appeared increasingly likely that the Bank of Canada would not lower interest rates again and that caused investors to adjust their assessments of fair value for bonds. The selloff late in the month was also exacerbated by rate-lock selling in Canada and the United States as corporate issuers tried to lock in low yields for future issues. (In a rate-lock, a prospective corporate bond issuer sells government bonds in advance of its own issue in order to “lock in” most of its funding costs. At the time of the issue, the corporation buys back the government bonds and sells its bonds at a yield spread versus the government benchmark.) As a result of the selloff, the FTSE TMX Canada Universe Bond index returned -1.36% in April.

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U.S. Large Caps Lead the Way in April

Ziegler PhotosThe S&P 500 Index resumed its upward trend in April with a 1.0% return for the month led by the performance of larger issues. Small and mid-cap stocks trailed in performance, with the S&P 600 Index declining 2.3% and the mid-cap S&P 400 Index falling 1.5%. The turn-around of many energy stocks led value-oriented equity management approaches to slightly out-perform growth-tilted strategies during the month. The Russell 1000 Value Index increased 0.9% in April, driven higher by the Telecommunication (+6.9%) and Energy (+6.0%) sectors, while the Healthcare (-1.7%) and Consumer Discretionary (-3.2%) sectors lagged the broad market.

 

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Q1 2015 Update

Joseph Sirdevan & Scott Connell- Galibier Capital Management Ltd.

Joe SirdevanSCOTT CONNELL

As of March 31st, 2015 the Fund contains 28 names in Canada and 25 names in the U.S. (both within our working range of 20-30 stocks per country). As always the Fund is concentrated in high conviction ideas that offer diversification across business sectors and market capitalization ranges. All of the 53 companies in the Fund demonstrate our five key criteria:  an enduring competitive advantage, the potential for high free cash flow, strong management teams, above average growth and an appropriate level of financial leverage.

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Current Corporate Spread Levels Remain Attractive

Baker Gilmore PhotoDarren Ducharme & Harold Scheer- Baker Gilmore

Excluding Japan, most developed market government bond yields fell sharply during the quarter. Declines were greatest for commodity producers (Canada and Australia) and Eurozone markets impacted by the introduction of the European Central Bank’s quantitative easing program; both the US and UK saw yields fall less, as investors continued to expect economic activity in those countries to accelerate later in 2015. Japanese yields moved slightly higher, largely reflecting institutional investment flows out of domestic assets. Equity markets – developed and emerging – generally moved higher, while movements in credit spreads were mixed.
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