Natixis Canada Blog

Ron Patton:


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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Divergence Between Stock and Bonds in Q4 2016 Highlights the Importance of a Balanced Strategy

Ron Patton, Portfolio Manager, Natixis Strategic Balanced Fund

Market Review & Outlook

The fourth quarter’s most distinctive attribute was the divergence between stock and bond performance, highlighting the importance of investing in a balanced strategy. The FTSE TMX Canada Universe Bond Index turned in its worst quarterly performance since March 1994. Yields increased ~45 basis points resulting in a -3.4% return. Stocks, represented by the MSCI World Index and the S&P/TSX Composite Index, moved higher. Canadian equities were the best performing asset class (up 4.5%), followed by global equities (up 3.9% in Canadian dollars), then bonds. As a result, our overweight position in global equities relative to Canadian equities was a slightly negative factor, while our underweight in bonds and our exposure to preferred shares was a positive factor.

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