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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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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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Markets Hit a New High on Positive Economic Backdrop

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

U.S. equity markets continued to advance in January as fourth-quarter earnings results were solid and economic data pointed towards continued growth, which offset declining optimism that President Trump can fully implement his pro-growth agenda. The S&P 500 Index reached a new all-time closing high of 2,298.37* on January 25. U.S. equity markets drifted lower in the month’s final days as President Trump signed executive orders on trade policy and immigration. Investors fear that the president’s stance on trade and immigration are counterproductive to the pro-growth policies he looks to implement. Large-cap stocks as represented by the S&P 500 Index gained 1.9%*, outperforming small-cap stocks measured by the Russell 2000 Index, which rose 0.4%*.

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Key Indexes Rebounded as Investors Absorbed the Implications of U.S. Presidential Election in Q4 2016

Oakmark Natixis Portfolio Managers
William Nygren; Kevin Grant; Michael Mangan, Harris Associates, Co-Managers, Oakmark Natixis Funds

Immediately following the presidential election, U.S. index futures plunged and at one point, futures for the Dow Jones Industrial Average dropped nearly 900 points*. Surprisingly, as investors absorbed the implications of this political sea change, key indexes rebounded and ended higher on November 9. The Dow went on to close at a record high level on November 10 and finished up for the quarter. Financials led the advance, first benefiting from investors’ hopes that the new Republican administration would roll back industry regulations and second, from the Federal Reserve’s (Fed) decision to raise short-term interest rates for the first time in 2016. Citing signs that the economy has improved, the Fed also stated it intends to raise rates three times in 2017. Similarly, optimism that policy makers will carry through on promises of considerable infrastructure spending helped share prices in the industrials and materials sectors and the pledge to expand domestic oil and gas production boosted energy companies’ shares.

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Anticipation of Pro-Growth Economic Policies Plus Positive Economic Reports Helped Propel Equity Market in Q4

Paul Stewart; Michael Buckius; Kenneth Toft; Daniel Ashcraft; Co-Managers, Gateway Low Volatility U.S. Equity Fund

The S&P 500® Index gained 3.82%* for the fourth quarter (in Canadian dollar terms, the return for the quarter was 6.28%), resulting in a total return of 11.96%* for the year. The quarter began with a 1.82%* loss for the month of October, followed by returns of 3.70%* and 1.98%* for November and December, respectively.

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