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By Fund Library News Wire | Monday, October 15, 2018



By Felix Narhi, CIO & Portfolio Manager, Penderfund Capital Management

In a previous commentary, we noted how the fundamental nature of capitalism is changing and why it is important to see the world as it really is. We further explored the phenomenon of technological disruption in our recent article “The four most dangerous words in investing.” We noted how technology-driven competitive advantage is becoming increasingly important in almost every sector. Today, investing in “technology” is far different from my father’s siloed technology investing in the 1970s and ’80s. MSCI, the world’s leading index and analytics provider, which manages the Global Industry Classification Standard (GICS®) that categorizes all companies into specific sectors, is belatedly making some changes to recognize this reality.


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By Fund Library News Wire | Friday, October 12, 2018

By Mike Keerma

Despite some upside strength on Friday, the major stock indices slumped badly on week as a whole, as swings between risk-off and risk-on sentiment had investors switching between stocks and bonds through the week. Concerns over whether another rate hike by the U.S. Federal Reserve Board would push the U.S. into a recession combined with uncertainties about a U.S./China trade war to unsettle markets, even as strong results from three big U.S. banks kicked off what is expected by many analysts to be a positive third-quarter earnings season. The S&P 500 Composite Index closed with a weekly loss for the third consecutive week, falling 4%, while the Nasdaq Composite Index lost 3.7% on week, despite posting its best single-day advance since late March. Toronto’s S&P/TSX Composite Index fell 3.3% on the week, as financials sold off in response to rising U.S. bond yields and energy stocks plunged as WTI crude oil dropped 3.8% on the week and the spread between Western Canada Select and WTI crude prices widened.


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By Fund Library News Wire | Friday, October 05, 2018

By Mike Keerma

The yield on the 10-year U.S. Treasury note rose to 3.22% on Friday, continuing a bond selloff, as investors reacted to an ultra-low 3.7% unemployment rate and an annual 2.8% hourly wage gain, both indicators signaling continuing strength in the underlying U.S. economy, solidifying expectations of another rate hike by the U.S. Federal Reserve Board before year-end. Lower-than-expected job creation of 134,000 new payrolls in September was attributed to temporary labour market distortions in the wake of Hurricane Florence. North of the border, Statistics Canada’s monthly Labour Force Survey showed a gain of 63,000 jobs in September, continuing a recent volatile trend in monthly jobs data. Average hourly wage growth edged down to 2.2% in the month from 2.6% in August, while the unemployment rate ticked down to 5.9% from 6.0%. With investors selling equities in lockstep with U.S. markets, Toronto’s S&P/TSX Composite Index consequently posted a 0.8% decline on the week, despite a 1.2% gain in the price of WTI crude oil and a 1.0% uptick in the price of gold. The big blue-chip S&P 500 Composite Index retreated 1.0%. The Nasdaq Composite Index lost the most ground on the week, dropping 3.2%, driven mainly by losses in high-growth technology and Internet issues.


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By Fund Library News Wire | Friday, October 05, 2018

By Mike Keerma

The yield on the 10-year U.S. Treasury note rose to 3.22% on Friday, continuing a bond selloff, as investors reacted to an ultra-low 3.7% unemployment rate and an annual 2.8% hourly wage gain, both indicators signaling continuing strength in the underlying U.S. economy, solidifying expectations of another rate hike by the U.S. Federal Reserve Board before year-end. Lower-than-expected job creation of 134,000 new payrolls in September was attributed to temporary labour market distortions in the wake of Hurricane Florence. North of the border, Statistics Canada’s monthly Labour Force Survey showed a gain of 63,000 jobs in September, continuing a recent volatile trend in monthly jobs data. Average hourly wage growth edged down to 2.2% in the month from 2.6% in August, while the unemployment rate ticked down to 5.9% from 6.0%. With investors selling equities in lockstep with U.S. markets, Toronto’s S&P/TSX Composite Index consequently posted a 0.8% decline on the week, despite a 1.2% gain in the price of WTI crude oil and a 1.0% uptick in the price of gold. The big blue-chip S&P 500 Composite Index retreated 1.0%. The Nasdaq Composite Index lost the most ground on the week, dropping 3.2%, driven mainly by losses in high-growth technology and Internet issues.


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By Fund Library News Wire | Thursday, October 04, 2018



By Felix Narhi, CIO & Portfolio Manager, Penderfund Capital Management

Legendary investor Sir John Templeton warned, “The four most dangerous words in investing are, 'It’s different this time,' ” and we wholeheartedly agree. We believe it is important to keep in mind that just about everything is cyclical. To wit, last year we wrote about cyclicality of the loonie and potential challenges to Canadian housing in the late innings of the cycle. Regrettably, some of these concerns are starting to bear fruit as interest rates have risen to multi-year highs over the past year.


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By Fund Library News Wire | Tuesday, October 02, 2018



By Aubrey Basdeo and Rachel Siu, BlackRock Canada

A little over a year ago, the Bank of Canada (the Bank) surprised markets with a rate hike in July 2017, kicking off its rate normalization path. Yields, particularly on the front-end of the curve, have moved higher: The 2-year Government of Canada yield has risen by nearly 100 basis points, to 2.06% (as at Aug. 31, 2018), leaving investors wondering what to do with their bond portfolios.


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By Fund Library News Wire | Monday, October 01, 2018



By Kristina Hooper, Global Market Strategist, Invesco Ltd.

The week of Sept. 17 brought bad news on trade and Brexit, yet stocks globally shrugged off the news and rose higher. In the U.S., the S&P 500 Index hit new highs (albeit on low breadth), while the yield on the 10-year Treasury bond surpassed the key 3% level.1 Because the 10-year U.S. Treasury yield tends to be a far more accurate fear gauge than any equity indicators (such as the VIX), I can’t help but be fixated on a few questions: Why did the 10-year yield rise? And where will it go from here?


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By Fund Library News Wire | Friday, September 28, 2018

By Mike Keerma

Against a backdrop of rising trade tensions and a 25 basis point increase by the U.S. Federal Reserve in its federal funds rate, to a target range of 2%-2.25%, the main North American stock indices posted minor losses on the week and produced uninspiring performance for the month. The S&P 500 Composite Index closed Friday with a weekly loss of 0.5% but managed to eke out a 0.4% gain for the month. For the quarter, the index gained a rather more robust 7.2%. The Nasdaq Composite Index likewise remained flaccid on the week, with only a 0.7% advance, but edged down 0.8% in September overall. Still, the tech-weighted index posted a healthy 7.1% gain in the third quarter. Toronto’s benchmark S&P/TSX Composite Index, however, showed red across all timeframes, posting a 1% loss on the week, the month, and the quarter, as a deal with the U.S. on the North American Free Trade Agreement remained elusive and the energy index lost 6.3% in the quarter. While WTI crude oil gained 3.7% on the week and 5.2% in September, it came up short in the quarter, with a loss of 1.2%, but remains ahead 21.6% year to date. Gold also remained in the red for all time frames, losing 4.7% overall in the quarter.


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By Fund Library News Wire | Thursday, September 27, 2018



By Felix Narhi, CIO & Portfolio Manager, Penderfund Capital Management

Never before in history have the largest global enterprises required so little tangible capital to generate enormous profits. These new digital business models are, in theory, infinitely scalable with very little incremental capital. For example, if Google, Facebook and Microsoft decided to return all their excess cash and non-core investments to shareholders via a special one-time distribution, the collective tangible capital left in their businesses would be modest. Yet the lack of tangible assets from a traditional accounting viewpoint would have virtually no impact on their earnings power. Free cash flow would still be enormous and growing.


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By Fund Library News Wire | Tuesday, September 25, 2018

 

By Jay Aizanman, Director, Desjardins Global Asset Management

Many people have become comfortable investing in basic index products as part of their investment regimen. And why not? Active managers often have difficulty beating their benchmarks, an issue which is only worsened by the fact that fees and operating costs compound the underperformance. By contrast, index investing is cheap, simple to understand given its transparency, and importantly, less prone to subjective human judgment by being rules based. No wonder investors have piled into passive investment products.1 Given increased familiarity and acceptance, investors have begun turning towards smart beta and factor indices to obtain better returns and manage risk more effectively. Why is that?


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By Fund Library News Wire | Friday, September 21, 2018

By Mike Keerma

The major North American stock indices shrugged off escalating trade tensions between the U.S. and China, and, well, just about everyone else, as the S&P 500 Composite Index posted a gain of 0.9% on the week, while the Dow Jones Industrial Average closed at a record high 26,743.50, for a gain of 2.2% on the week. Toronto’s S&P/TSX Composite Index rose 1.3%, buoyed by a 2.7% weekly advance in the price of crude oil and a decline in the rate of inflation in July, to 2.8% from 3% in June. Weakness among the U.S. tech giants, however, contributed to flat performance in Friday’s session and kept the broader indices in check, while the Nasdaq Composite Index ran a marginal loss of 0.3% on the week.


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By Fund Library News Wire | Friday, September 14, 2018

By Mike Keerma

The big U.S. stock indices advanced on the week, despite some volatility on Friday on news that President Donald Trump intends to follow through on an additional US$200 billion in tariffs on Chinese goods. While trade tensions caused some intraday volatility on Friday, investor sentiment remained buoyed by underlying U.S. economic strength reflected in strong corporate profits, the rising price of crude oil, which boosted energy issues, and an increase in Treasury yields, which boosted financials and firmed up the U.S. dollar. The S&P 500 Composite Index gained 1.2% on the week, while the Nasdaq Composite Index advanced 1.4% as most of mega-cap tech giants made gains on the week. Toronto’s S&P/TSX Composite Index edged back on the week, however, with a marginal 0.5% loss. Crude oil gained 1.6%, but gold continued its slide, down 0.2% week over week.


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By Fund Library News Wire | Tuesday, September 11, 2018

A SPECIAL REPORT FROM



By Nash Swamy, Junior Analyst, Analytics & Data, Fundata Canada Inc.

Hedge funds have long been the envy of the investment industry, with complex and precisely executed trading strategies. While access to this group of funds remains with a select few, often institutional mandates or high net worth individuals, their presence is always felt and known by the average investor. But how have hedge funds been performing? The average investor often hears about the success of these rarefied funds, in the hope of being able to achieve similar returns. This year’s Canadian Hedge Funds Awards night, produced by Alternative IQ and sponsored in part by Fundata, is coming up on Oct. 16. So in this article I’ll lift the veil of mystery just a bit, and take a look at what made some of last year’s award-winners tick.


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By Fund Library News Wire | Friday, September 07, 2018

By Mike Keerma

As trade tensions cast a pall over a robust U.S. jobs report for August, with 201,000 jobs created and a continuing low 3.8% unemployment rate, the big North American stock indices posted losses on the week. U.S. President Donald Trump announced an additional US$267 billion in tariffs on Chinese goods in addition to the US$200 billion previously announced. And the fractious negotiations between Canada and the U.S. on the North American Free Trade Agreement continued without resolution through the week. Declines in the technology sector weighed on the big U.S. gauges, with the S&P 500 Composite Index retreating 1% on the week, and the Nasdaq Composite Index dropping 2.6%. Canada’s August jobs report showed a decline of 51,600 jobs, while the unemployment rate edged up to 6%. The gloomy jobs picture combined with an equally gloomy trade outlook and a 2.8% decline in the price of crude oil to push Canada’s S&P/TSX Composite Index to a 1.1% week-over-week loss. Investors remained disinterested in gold, however, as a safe haven or for any other reason, as the yellow metal edged down 0.4% on the week, for an 8.2% year-to-date loss.


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By Fund Library News Wire | Friday, August 24, 2018

By Mike Keerma

Stock markets edged up slightly on the week, as traders discounted the political shenanigans in Washington and focused on economic fundamentals, particularly in U.S. markets, where sentiment was buoyed on Friday by what were viewed as dovish comments from Federal Reserve Board Chairman Jerome Powell. His stated view that monetary policy should be normalized gradually helped boost the Dow Jones Industrial Average to an intraday record high. The Nasdaq Composite Index ended Friday with a record high close of 7,945.98, for a weekly gain of 1.7%. The S&P 500 Composite Index advanced 0.9% on the week, its second straight weekly gain, also posting a record high close of 2,874.69 on Friday. Gains in the gold and energy sectors lifted Toronto’s S&P/TSX Composite Index to a 0.2% weekly gain, as gold rose 1.8% on the week and crude oil surged 4.2%.


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By Fund Library News Wire | Tuesday, August 21, 2018



By Aubrey Basdeo, Managing Director, Head of Canadian Fixed Income, BlackRock

The Bank of Canada (the Bank) continues to emphasize its data-dependency approach to guide future policy decisions. But we think there are two developing stories that might make this data dependency more fragile through the rest of the year, and therefore more likely to give the Bank cause for pause, even if the data come in as strongly as expected.


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By Fund Library News Wire | Friday, August 17, 2018

By Mike Keerma

North American stock markets ended the week nearly flat or down slightly, reacting to news that China and the U.S. are ready to get back to the trade table sometime next week, after a few weeks of bluster and wind from the White House and a couple of rounds of tit for tat tariffs. In addition, rumors bubbled in the business media about possible preparations for a November summit between Trump and China’s Premier Xi Jinping. That helped lift markets in Friday’s session, but concerns over potential regional contagion from the Turkish currency crisis overcame continuing strength in the tail-end of earnings season to keep weekly index performance muted. The S&P 500 Composite Index edged up 0.6% on the week, while the Nasdaq Composite Index lost 0.3%, dragged down by less-than-thrilling quarterly earnings results from tech giants Nvidia Corp. (NASDAQ: NVDA), Tesla Inc. (NASDAQ: TSLA), and Applied Materials Inc. (NASDAQ: AMAT). Toronto’s S&P/TSX 500 Composite Index ended the week flat, held back by a decline in West Texas Intermediate crude oil prices to US$65.85 per barrel, for a loss of 2.8% on the week.


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By Fund Library News Wire | Thursday, August 16, 2018



By Kristina Hooper, Global Market Strategist, Invesco Ltd.

Activity in currency markets has more than tripled in the last two decades.Between 2001 and 2016, global turnover in currency markets rose from $1.2 trillion to $5.1 trillion,1 and the geopolitical disruption of the last two years has increased currency activity even further. Last week brought several significant examples of this trend in the U.K., China, Iran, and – most dramatically – Turkey. Is this a sign of more disruption to come?


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By Fund Library News Wire | Friday, August 10, 2018

By Mike Keerma

Global markets edged down on Friday after the European Central Bank voiced concerns about the independence of Turkey’s central bank following President Recep Erdogan’s contentious reelection in June. The Turkish lira fell 20% on the week against the U.S. dollar, and Turkish stocks plummeted in heavy trading. Stock markets in Europe, as well as in emerging markets, sold off as investors feared a contagion effect of Turkey’s economic and currency woes spreading into other vulnerable markets, against a backdrop of continuing trade and tariff disputes. Toronto’s benchmark S&P/TSX Composite Index fell 0.6% on the week, as crude oil retreated 1.3%. The S&P 500 Composite Index ended Friday down 0.3% on the week, while the Nasdaq Composite Index gained 0.4% on the week fueled by momentum in the tech majors. In a classic risk-off trade as investors moved from equities to safe haven assets, gold gained 1.4% on Friday, but still closed down 1.3% on the week.


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By Fund Library News Wire | Monday, August 06, 2018

 

By Bobby Eng, Vice President, State Street Global Advisors

Come September, S&P® Dow Jones® Indices and MSCI Inc. are changing the Global Industry Classification Standard (GICS®) structure and reclassifying selected companies. When these changes become effective, they will create a new landscape of growth-oriented exposures and the need for sector investors to alter their due diligence.


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