Q4 2021 Market Updates from our Partners

For the year 2021, many value managers experienced a noticeable improvement in relative performance compared to both competing investment styles and broad industry benchmarks.  Given Brandes’ commitment to a fundamentals-focused, pragmatic approach to value investing across all asset classes – including emerging markets - we were positively impacted by this development.

We continue to believe that value stocks are well positioned going forward; as a group they trade close to the lower levels of valuation when compared to the broader market, and at compelling discounts relative to their growth counterparts.  In addition, we continue to feel that there is potential for improvement in the earnings growth for many value-oriented companies, particularly as global economies continue to recover from recent challenges.”

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Global stocks ended the year with solid quarterly gains despite the threat of rising inflation, higher interest rates and the spread of the omicron coronavirus variant.

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Strong earnings growth and a robust liquidity environment supported global stock markets in 2021 led by US large caps as the SPX 500 rose over 28%. Most other equity markets also rose but lagged their US counterparts. Canadian equities rose 25%, International stocks were up 9% while emerging market equities were roughly flat. Commodities rose 27% finishing the year as one of the best asset classes. Fixed income were negative as above trend growth and inflation kept bonds on the defensive. Our portfolios benefited from a significant overweight in equities and underweight in fixed income in addition to benefiting from selection within both equity and bond funds.

CI Asian Opportunties Fund

CI Canadian Income Growth Fund

CI Corporate Bond Fund

CI Select Canadian Equity

Cumberland Private Wealth portfolio managers examine 2021 and provide insight to what we might expect in 2022.

Watch now: Quarterly Market Update

Despite facing multiple waves of Covid-19, multi-decade highs on inflation, and an abrupt shift in the monetary policy outlook, robust global demand and powerful earnings recoveries saw global equity markets posting some impressive gains in 2021.

Following dramatic fiscal and monetary policy moves in 2020 and 2021, the stage is set for 2022 to be a year of transition as policies and economies move toward a more normal state. However, issues remain that will likely define the economic and market environment, including continued supply-chain disruptions and an upsurge in demand that threaten to keep inflation high across many economies. For 2022, our outlook is centered on the question of inflation and how markets and policymakers may react to it.

Have Omicron and the U.S. Federal Reserve changed our 2022 outlook?

Invesco 2022 Investment Outlook

2021 Q4 Invesco Main Street U.S. Small Cap Class - 3 month

2021 Q4 Invesco Global Real Estate Fund Performance Commentary - 3 month

2021 Q4 Invesco Global Companies Fund Performance Commentary - 3 month

2021 Q4 Invesco Europlus Fund Performance Commentary - 3 month

2021 Q4 Invesco Canadian Fund Performance Commentary - 3 month

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.

Balanced 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