After a difficult 2018 year-end which saw return levels comparable to those of the Great Depression, the first quarter of 2019 finally brought good news! In fact, the start of the year has been one of the best for global stock markets, with happy returns for investors. Our managers were able to take advantage of the situation and our funds turned in an excellent performance.
Highly rated funds
Thanks to this turnaround, 82% of our Series A funds were above their respective median in the Morningstar ratings. Note among others the performance of our FDP Balanced Portfolios, which generated outstanding returns.
- Our FDP Balanced Portfolio performed particularly well with a return of around 8%, the best quarterly return for this fund in the past 20 years.
In light of this excellent news, will it be possible to maintain this performance level in the coming quarters? To answer this question, we analyzed the returns of the past two decades.
- During this period, the return for the first three months of the year exceeded 3% on six occasions.
Five of those six years ended with annual returns of between 5.9% and 11.6%. An excellent first quarter is therefore not synonymous with anemic returns for the rest of the year. The year 2019 could well follow this historical trend.
Monetary policy and the economy
- The monetary authorities, and particularly the U.S. Federal Reserve (Fed), downgraded the need for interest rates hikes, giving fixed-income securities a second wind.
- The global economy is indeed slowing, but it remains in positive territory.
- Companies are still reporting good earnings and the negotiations surrounding the trade war between Washington and Beijing could also add fuel to this phase of economic growth.
In any event, our recommendation is to protect your wealth by sticking to your investment policy. Economic cycles come and go, but a personalized investment policy is your best protection against the vagaries of the markets. Speak about this with your wealth management advisor!
François Landry, CFA
Senior Vice-President and Chief Investment Officer