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Stéphane Girard
MBA, CIMTM, Fin. Pl.

Investment Specialist, Products Knowledge

Easy does it

The reopening of our economy is on the horizon and it will be more in the form of a marathon than a 100-metre sprint. The news is good, but as our Premier François Legault has made clear to us, this return to an almost normal life and a resumption of business activities will have to be done in a measured way.

A gradual reopening

Gradually, that’s how the reopening plan for the Quebec economy will be carried out and, like high-performance athletes, we’ll have to pace ourselves to reach the finish line. And, of course, maintain a series of health measures that are not about to go away.

Who will the winners be?

The resumption of economic activity will affect the stock markets, which are expected to gradually regain lost ground. It’s difficult to speculate on the recovery, but we already know that some sectors will return to positive territory much faster than others. And in addition to these sectors, certain factors, which are characteristics of stocks or of fixed-income securities, will be more sought after and will therefore come out winners.

Let’s take a look at how this will play out across sectors, securities and factors.

Leading sectors

All stocks in the various indices are classified by sector. The consensus classification system is the MSCI Global Industry Classification Standard (GICS). This system consists of eleven different sectors, which are further subdivided into industry groups, industries and sub-industries.

You may be surprised to learn that as of April 22, three sectors of the S&P/TSX index are in positive territory, even though year to date the overall index has produced a return of -15.33%.

  • Unsurprisingly, the best performing sector is technology, which leads with a return of more than 23%. Shopify is one of the reasons for this performance, as shares of this company are up by more than 68% since the beginning of the year and it now represents around 5% of the S&P/TSX.
  • Next comes the materials (raw materials) sector, which includes gold stocks, followed by consumer staples. Many companies designated as essential services fall into this latter category, such as the Quebec food and pharmaceutical distributor Metro, which has just announced a 25% increase in sales for the period March 15 to April 11, 2020 compared to the same period last year. Shares of Metro have risen by almost 13%.

Positioning of the leaders in our funds

Many of you are undoubtedly curious to know if the winning stocks we just mentioned are part of our portfolios. So here’s a little table that shows you their percentage in our Canadian equity funds as of mid-April.

Fund Gold Shopify Metro
FDP Canadian Dividend Equity 1,52% 0,55% 2,61%
FDP Canadian Equity 8,97% 4,42% 1,58%
FPD Canadian Opportunities Equity 8,76% 5,01% 1,70%
And the laggards…

Other sectors will take much longer to recover: energy is likely to remain at the back of the pack for some time, as will real estate and consumer discretionary.

It should also be noted that certain sectors will not necessarily perform the same in all regions of the world. For example, the health care sector ranks last in Canada and has performed even worse than energy since January 1. In the U.S. and international markets, however, the health care sector ranks first and is about to enter positive territory.

So bear in mind that sector and geographic positioning will have a significant impact on the performance of an investment portfolio.

Food groups, foods and nutrients

In their security selection process, portfolio managers now take their analyses much further. They no longer just study securities: they examine the factors of these securities.

What are these factors? They are intrinsic characteristics of stocks or fixed-income securities. To make an analogy, sectors are like food groups, securities themselves are foods, and factors are the nutrients found in each food.

For the good health of your portfolio, it needs several factors or nutrients. Again, some factors will top the list, while others will be less sought after.

  • Since the start of the year, large cap stocks and quality stocks (companies with little debt and sustained growth which generate steady income) have generally done better.
  • Companies that integrate ESG (Environmental, Social and Governance) principles also stand out.
  • At the other end of the spectrum are momentum-style companies that have a lot of debt on their balance sheets.
  • Historically, high-dividend stocks were sought after in difficult times and they offered some protection in periods of decline. Currently, the opposite is happening: the dividend income factor is among the worst performers. This could be explained by the fact that many companies are considering reducing or even temporarily eliminating their dividends. In fact, the British government asked the country’s banks to stop paying dividends.

Light at the end of the tunnel

To summarize, there are glimmers of hope on the horizon. As we explained in our previous communications, the Financial’s internal and external managers remain very active at all levels in order to, first, protect capital, and also to position the portfolios so as to be able to reap the maximum from the regions, sectors, securities and factors that will experience the sharpest rebounds.

Even if it is gradual, the recovery should offer us its share of opportunities and good news!

At the Financial, we have an experienced team of managers, including in fixed income, as well as an outstanding selection of external managers, whose complementary expertise contributes each day to the performance of our range of funds. Together, we seek the best performance for our funds and for our approaches, and especially for your portfolio.

If you have any questions regarding your portfolio, feel free to contact your advisor.


Stéphane Girard, MBA, CIMTM, Fin.Pl.
Product Manager, Professional Practice

The information contained herein has been obtained from sources deemed reliable, but we do not guarantee the accuracy of this information, and it may be incomplete. The opinions expressed are based upon our analysis and interpretation of this information and are not to be construed as a recommendation. For any questions, don’t hesitate to contact your wealth management advisor or your tax specialist, accountant or legal advisor.


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