Bond Fund & Core Plus Bond Fund
In the Canadian fixed income market, the yield of the FTSE Canada Universe Bond Index ended the quarter at 1.9%, up 0.1% from where it began. Yields trended higher for most of the quarter before reversing course towards the end of November on the back of the discovery of a new COVID-19 variant, Omicron, which renewed fears of a potential global economic slowdown. Active positioning within interest rate anticipation and credit and liquidity strategies resulted in the fund finishing the quarter ahead of the benchmark. Overall, the fund’s risk budget remained focused on credit and liquidity strategies over interest rate anticipation strategies, and we continued to upgrade the credit quality of the fund during the quarter.
Dividend Income Fund
The Canadian equity market continued to post strong returns over the quarter supported by positive momentum in commodity prices, especially in Energy, as improving demand from the economic recovery has been met with low inventory levels. Financials, the S&P/TSX’s biggest sector, also contributed significantly to returns, thanks to improved bank earnings and strong capital markets. The Info Tech sector rallied to start the year but faded more recently and ultimately generated a negative return in the fourth quarter as highly valued growth companies struggled to keep pace with cyclical sectors in the Canadian market. Our dividend strategy posted a strong positive return over the quarter, outperforming the broader Canadian equity market. Value-added was led by the fund’s relative positioning in Info Tech. Not owning Shopify, Lightspeed, and Nuvei, none of which pay a dividend and performed poorly this quarter due to a rotation away from growth stocks, benefitted the fund.
Equity markets were volatile over the period as investors weighed the impact of more persistent inflation, an increasingly hawkish Fed, and the risk posed by the new Omicron variant. With many equity markets continuing to hover near their all-time highs, we thought it prudent to reduce some equity exposure and increase our liquidity position in order to take advantage of future opportunities. Global fixed income markets experienced mixed performance in the fourth quarter. The quarter began with core government bond yields rising on market expectations of earlier-than-anticipated monetary policy tightening in the face of higher inflation expectations. This trend reversed in late November amid concerns surrounding the spread of the Omicron variant, resulting in core government bond yields finishing the quarter relatively unchanged. Our Balanced strategy finished the quarter ahead of its blended benchmark, with contribution coming primarily from the strategy’s equity component.
PH&N Bond Fund - Q4 2021
PH&N Core Plus Bond Fund - Q4 2021
PH&N Dividend Income Fund - Q4 2021
RBC GAM GIO - New Year 2022
PH&N Balanced Pension Trust - Q4 2021