Market monitor: Stocks lose ground

U.S. inflation at 40-year high, Bank of Canada hikes bank rate to 2.5%

The major North American stock indexes all lost ground on the week, as inflation rates remained elevated and central banks continued tightening monetary policy, most visibly by raising interest rates. The Bank of Canada this past week raised its policy rate by a full percentage point, to 2.5%. In the U.S. the consumer price index for June rose an annualized 9.1%, increasing the probability of further rate hikes by the U.S. Federal Reseve Board, following last month’s 75 basis point hike in the fed funds rate to the 1.50%-1.75% range.

With stock markets still focused on rising rates evaluating the impact on future earnings, the S&P 500 Composite Index lost 1.0% on the week, while the Nasdaq Composite Index slid 1.6%. Toronto’s S&P/TSX Composite Index dropped 3.3%, with technology, banks, and materials leading the way down. Crude oil fell 7.0% on the week, while gold fell 1.9%.

Fund news

* PH&N re-opens high yield bond fund. RBC Global Asset Management announced on July 11 that it will re-open its Phillips, Hager & North High Yield Bond Fund to new investors as of July 12, 2022.

With $550 million in assets under management, the fund seeks to provide a high level of income and the opportunity for capital appreciation by investing primarily in a well-diversified portfolio of fixed-income securities issued by Canadian and/or foreign corporations and governments.

The fund was capped to new investors on April 17, 2020. According to a release from RBC, it currently has a limited amount of additional capacity, allowing for purchases by new investors. RBC GAM Inc. has identified an opportunity to deploy capital in higher quality fixed-income instruments over the next several months to take advantage of current risk-adjusted yields. RBC GAM Inc. reserves the right to cap the Fund or otherwise restrict investment at a later date.

* Fidelity closes two funds to new investors. Fidelity Investments Canada on June 30 announced the closure of purchases by new investors into Fidelity Canadian Opportunities Fund and Fidelity Canadian Opportunities Class effective 4:00 pm, July 26, 2022. Fidelity said it is making the decision to limit inflows to preserve the integrity of the funds' strategies, as well as to seek to maximize return potential for existing investors. Existing investors who currently own the Funds may continue to make additional purchases.

* Horizons consolidates shares. Horizons ETFs Management Canada announced on July 13 the consolidation of shares or units of  a number of ETFs effective after the close of trading on Friday, July 29, on both the Toronto Stock Exchange and the NEO Stock Exchange, as indicated in the table below. Shares will begin trading on a post-consolidated basis on Tuesday, August 2.

* Dynamic renames inflation fund. Dynamic Funds announced on July 5 that the Dynamic Diversified Real Asset Fund has been renamed to Dynamic Diversified Inflation Focused Fund, and its management fee has been reduced by 10 basis points on all open retail series. The fund’s investment objectives, strategies, and risk rating remain the same.

With a 17-year track record of managing through various stages of market cycles, the fund is a diversified, strategically managed solution consisting of multiple asset classes and strategies that are impacted by various inflation factors that aims to help preserve a portfolio’s long-term purchasing power.

* Purpose launches new ESG fund. Purpose Investments on July 12 debuted its Black Diamond Impact Core Equity Fund (TSX: BDIC), Which aims for diverse exposure across equity securities of companies all around the world that demonstrate a forward-looking sensitivity to environmental, social, and governance factors. The portfolio management team will carefully assess opportunities by analyzing governance structures, stakeholder alignment, incentives, and capital allocation. The subadvisor is Black Diamond Asset Management Inc.

* Ninepoint offers income ETF in Canadian dollars. Ninepoint Partners announced on June 29 that the ETF series units of Ninepoint Target Income Fund (NEO: TIF) will be available for purchase in Canadian dollars as of the June 30, 2022.

Supported by RBC Quantitative Investment Solutions, the Fund leverages RBC Capital Markets’ diversified, systematic put selling strategies on multiple equity indexes seeking to deliver a 6% target income distribution with lower volatility than a direct investment in the broad equity markets.

Monitor the main stock and commodity indexes daily with the Fund Library’s interactive Markets Page.

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