Natixis Canada Blog


Bonds and Equities Produce Positive Returns in Q1 2017, Signalling Stronger Economic Growth for 2017

Ron Patton, Portfolio Manager, Natixis Strategic Balanced Fund

Market Review & Outlook

All asset classes – fixed income, Canadian equities, and global equities – produced a positive return in the first quarter. Equities continued to advance higher, with the MSCI World Index, up 5.8%, outperforming S&P/TSX Composite Index, which was up 2.4%, following an excellent performance in 2016. The FTSE Canada Universe Bond Index returned 1.2%, a significant rebound from the -3.4% return seen in the fourth quarter of 2016.

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U.S. Equities Finish March Relatively Flat

Donald Nesbitt & Mikhail Alkhazov, Ziegler Capital Management, Portfolio Managers of NexGen US Dividend Plus Funds

The final revision to 2016 fourth quarter U.S. GDP was released in March and showed that growth slowed to a 2.1% annualized rate, after showing a marked acceleration in the third quarter of 2016. However, personal consumption remained surprisingly strong, as consumer and business confidence indicate a level of optimism not seen in 15 years. The optimism and enthusiasm around prospects for the new administration quickly succumbed to the realities of politics, as the first major attempt to reshape the U.S. government stumbled over the health care initiative. This setback has dampened expectations for extensive tax reform and additional stimulus programs. Nevertheless, there is still a large disparity between “soft” survey data, which reflects a high degree of optimistic sentiment about the future, and the “hard” data that reflects low to moderate economic growth.

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Volatility Returns to U.S. Equities as Confidence in Trump’s Pro-Growth Agenda Fades

Dennis Ruhl, Portfolio Manager, NexGen U.S. Growth Funds

Volatility returned to U.S. equity markets as investors began to question the ability of President Trump to fully implement his pro-growth agenda. The S&P 500 Index reached a new all-time closing high of 2395.96 on March 1. However, equities started to drift lower as opposition to the American Health Care Act of 2017 (AHCA) increased while crude oil prices fell below $50.00 a barrel. The S&P 500 experienced its first 1%* decline since October 2016 on March 21as it became apparent the AHCA would not have the votes to pass through the House of Representatives. Equities recovered in the month’s final week as President Trump immediately shifted his focus to tax reform. Small-cap stocks measured by the Russell 2000 Index gained 0.13%* and barely outperformed large-cap stocks as represented by the S&P 500, which rose 0.12%*.

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Global Equities Benefited from the Synchronized Uptick in Global GDP Growth in Q1 2017

Charles Lannon, Portfolio Manager, NexGen Global Equity Fund


Global equities, as represented by the MSCI World Index, returned 5.35% in Q1 2017 (in Canadian dollar terms, net of dividends). Sector leadership this year shows a marked shift from the types of stocks that enjoyed an initial bump in the aftermath of Trump’s victory. Thus far in 2017, cyclical stocks and industries are no longer outperforming. This likely reflects a more sanguine appreciation of the challenges that the new administration faces in implementing its agenda. It might also reflect a consideration as to whether or not the suite of policy proposals can instill the confidence necessary to accelerate U.S. GDP from the 1.6% growth rate that Bloomberg consensus expects this year. Regardless, global equities undoubtedly benefited from the synchronized uptick in global GDP growth with key PMI’s from the U.S., Europe, China and Japan remaining clearly above 50, a level that denotes growth and expansion.



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U.S. Equities Climb on Favourable Earnings and Economic Data

Dennis Ruhl, Portfolio Manager, NexGen U.S. Growth Funds

U.S. equity markets climbed higher consistently throughout February as fourth-quarter earnings results were solid and nominal economic growth continued to strengthen. Despite some theatrics from Washington, optimism remains for President Trump’s pro-growth agenda. The S&P 500 Index reached a new all-time closing high of 2,369.75 on February 27. Large-cap stocks as represented by the S&P 500 Index gained 4.0%*, outperforming small-cap stocks measured by the Russell 2000 Index which rose 1.9%.*

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