The Finish Line Commentaries: Q2 Summary

Facebook
Twitter
LinkedIn
Email

Author: Danny Popescu  |  July 5, 2021

Good Day,

Global stock markets continued to move higher in Q2 with the S&P 500 (CAD) rising 6.42%, and the main Canadian Index, the TSX Composite, having a strong quarter, increasing 7.91%, primarily off big gains in energy companies. For the 2nd quarter in a row, there was a large dispersion amongst equity sectors with cyclical sectors such as financials and energy stocks racing much higher, while growth sectors of healthcare (biotech) and technology were flat.

The Canadian dollar (CAD) appreciated during the quarter peaking in May at $0.83 before falling quickly back to $0.81 and closing at $0.81 for a gain of 1.42%. The Loonie continues to move higher in conjunction with oil, and should the price of oil continue to rise, we would expect the CAD to follow suit.

Bonds reversed some of the losses they suffered in Q1, with the Canadian Universe Bond Index rising 1.05% for the quarter, but still down 4.86% for the first half of 2021. Interest rate volatility continues to persist as some believe inflation is temporary, while others believe it is here to stay. The most significant marginal participant in markets, global central banks, remain steadfast that inflation will be temporary and will fall once economies are back to normal and pent-up demand fades. However, investors still appear to be seeking out inflation hedges, with big run-ups in oil and other commodities during the quarter. We continue to minimize our bond holdings and replace them with private securities such as private debt and private real estate which benefit from inflation and are uncorrelated to public equities. The result is a less volatile portfolio with better downside protection than portfolios with traditional fixed income.

With continued strength in equity markets, we are maintaining our maximum overweight position to equity assets (stocks and private real estate). Our portfolios are well-diversified from an equity sector perspective, and we will make trades when we see opportunities. We continue to monitor the actions of central banks and the bond market for clues on money flow/credit into the economy, to determine when we may need to reduce our equity exposure. On the safety side of the portfolio, private debt and private real estate continue to perform as expected, providing consistent cash flows and capital appreciation, to offset the volatility of the public securities markets.

Thank you,

Danny Popescu

CHIEF EXECUTIVE OFFICER

“I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.”

Disclaimer – This information transmitted is intended to provide general guidance on matters of interest for the personal use of the reader who accepts full responsibility for its use and is not to be considered a definitive analysis of the law and factual situation of any particular individual or entity. As such, it should not be used as a substitute for consultation with a professional accounting, tax, legal or other professional advisor. Laws and regulations are continually changing, and their application and impact can vary widely based on the specific facts involved and will vary based on the particular situation of an individual or entity. Prior to making any decision or taking any action, you should consult with a professional advisor. The information is provided with the understanding that Harbourfront Wealth Management is not herein engaged in rendering legal, accounting, tax or other professional advice. While we have made every attempt to ensure the information contained in this document is reliable, Harbourfront Wealth Management is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or as to the outcome to be obtained from the use of this information, and is without warranty of any kind, express or implied. The opinions expressed herein do not necessarily reflect those of Harbourfront Wealth Management Inc. The particulars contained herein were obtained from sources we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are not to be construed as a solicitation or offer to buy or sell any securities mentioned herein. Harbourfront or any of its connected or related parties may act as financial advisor or fiscal agent for certain companies mentioned herein and may receive remuneration for its services. The comments and information pertaining to any investment products (The Portfolios) sponsored by Willoughby Asset Management are not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units of The Portfolios is made pursuant to the Offering Memorandum or Simplified Prospectus and only to investors in Canadian jurisdictions. Important information about The Portfolios is contained in the Offering Memorandum or Simplified Prospectus available through Willoughby Asset Management. Commissions, trailing commissions, management fees, performance fees, and expenses all may be associated with investments in The Portfolios. Investments in The Portfolios are not guaranteed, their values change frequently, and past performance may not be repeated. Historical annual compounded total returns including changes in unit value and reinvestment of all distributions do not take into account sales, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Unit values and investment returns will fluctuate and there is no assurance that The Portfolios can maintain a specific net asset value. Harbourfront Wealth Management Inc. (“Harbourfront”) has relationships with related and /or connected issuers, which may include the securities or funds discussed in this commentary and are disclosed in our Statement of Policies Regarding Related and Connected Issuers. This policy is included in your new client package, on our website, or can be obtained from your investment advisor.