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Although stock markets around the world were pummeled into bear markets during the first quarter of the year, mostly in the four weeks from Feb. 18 to March 18, there has been something of a rebound in April. A look at the table above tells the story. In the first three months of the year, the S&P/TSX Composite Index spiralled to a loss of 21.6%. Yet that ghastly year-to-date number shrank rapidly through April, with the loss settling at 17% to the close of trading on April 9, as the index gained 9.5% last week. Ditto for the other main North American indices. The S&P 500 Composite Index surged 12.1% on the week, while the Nasdaq Composite Index rallied 10.6%.
Crude oil continues to roll around the bottom of the barrel with a year-to-date loss of 62.7%, as a glut of the stuff fills storage capacity to the breaking point. Mostly, that’s a result of the Saudi-Russian production war, as the two autocratic OPEC+ nations sought earlier this year to bankrupt U.S. shale-oil producers by flooding the market with cheap oil. Instead, they felt the squeeze themselves, as global demand unexpectedly shrank owing to the onset of the coronavirus pandemic. Last week, at a hastily-called meeting, the members of OPEC+ decided to call a truce and agreed to curtail overall production by 9.7 million barrels per day starting May 1. That might or might not happen, given OPEC members’ spotty records in adhering to agreements of any kind.
The market’s recent rally may well signal some light at the end of the tunnel. Investors apparently see a major positive in the massive monetary policy tactics by central banks, including buying bonds and resuming quantitative easing – very simply, printing money. They also approve of the loosening (abandoning, really) of the fiscal purse strings by governments in order to put cash in the hands of the vast ranks of the temporarily-unemployed and to support businesses on the brink of bankruptcy.
However, earnings outlooks, where they exist, remain highly uncertain because the duration and impact of the pandemic remains unquantifiable today. The stock market rally could well reverse as more economic data begin to come in, showing the true extent of the economic damage done. Gold, the ultimate crisis hedge, remains relatively calm, while exhibiting its safe-haven characteristics, gaining 14% year to date, with most of that advance coming this month.
For a more in-depth take on the impact of the coronavirus on investing, read these recent posts from Fund Library’s stable of investment experts.
“What investors should be watching in April” by Kristina Hooper of Invesco Canada.
“Are negative rates on the way?” by Gordon Pape.
“Factoring uncertainty” by Felix Narhi of Penderfund Capital Management.
“Investing in the time of coronavirus” by Tyler Mordy or Forstrong Global Asset Management.
Fund news and updates
* Canoe takes over all Fiera funds. Fiera Capital Corp. announced on April 9 that Canoe Financial LP will acquire the rights to manage all of Fiera Investments’ retail mutual funds. Subject to approvals, the transaction is expected to close on or about June 26.
Jean‑Phillippe Lemay, Global President and Chief Operating Officer of Fiera Capital, said in a release, “This transaction will allow Fiera Capital to broaden its existing partnership with Canoe by leveraging the combination of Canoe's strong distribution network in the Canadian retail market and Fiera Capital's excellence in investment management.”
All of the Fiera mutual funds will be renamed under the Canoe banner. And on July 3 Canoe intends to merge each of the Fiera funds into the corresponding retail mutual fund managed by Canoe. Fiera Capital will be sub-advisor for some of the Canoe funds.
For more detail about the fund changes, see the Fiera press release.
* CIBC shuts down Latin America fund. CIBC announced on March 27 that it plans to terminate the CIBC Latin American Fund on or about June 12. Fund units are no longer available for new purchases or additional purchases by existing unitholders and through regular investment plans. CIBC said it decided to shut down the fund because of the fund’s small asset size ($5 million).
* Accelerate lists arbitrage fund. Accelerate Financial Technologies debuted its Accelerate Arbitrage Fund (TSX: ARB) on April 7. The fund is an alternative exchange traded fund with a diversified portfolio of definitive arbitrage investment opportunities.
Julian Klymochko, founder and CEO of Accelerate and portfolio manager of the fund, said in a release, “We’re continuing our mission of democratizing alternative investments by bringing investors access to merger arbitrage in an easy to use, liquid and low-fee ETF.”
The event-driven ETF aims to generate consistent, low-volatility returns by investing in listed equity, debt or derivative securities of target companies involved in mergers or corporate actions, while selling short certain listed equity, debt or derivative securities of acquiror companies involved in mergers or corporate actions, where applicable.
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The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
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