Gain insight into portfolio recommendations

Beyond simply providing a recap of recent history, our
quarterly reports provide our clients with insight into portfolio recommendations we make based on our perspectives on the risks and opportunities resulting from current market conditions. We have also included an update of our forward 7-year capital market assumptions with expected return for each asset class and sub-asset class.

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Capital Markets

Global equity markets (ACWI Index) rose by 6.2% in Q2 and gained 16.7% YTD through July 14, 2023, with US stocks leading the rally due to optimism in tech companies, decreased inflation, positive economic data, and the resolution of the regional banking crisis. International equities had a less impressive performance, while fixed-income markets experienced modest declines and hedge funds saw moderate gains in Q2.

We are incorporating these views into portfolio positioning by:

  • Cash management via allocation to short-term US Treasuries and US investment-grade bonds

  • Continued allocations to new private strategies especially private equity secondaries

Strategic Asset Allocation View

Expect mid-to-high single digit nominal pre-tax annual equity returns (6.5%-7.5%)

The seven-year forecast predicts declining interest rates but at higher levels compared to the past decade. Labor shortages and geopolitical uncertainties are present, while equity returns are predicted to be mid-to-high single digits with growth stocks outperforming value stocks, albeit at a slower rate. Safe fixed income remains attractive, and riskier credit assets show promise over a mid-term timeframe.

Asset Class: Strategic Outlook


Fixed Income

Alternatives, Private Equity & Real Estate

Inflation and Labor Markets

Peaked inflation in major regions, but the pace of subsiding towards central bank targets remains uncertain and debated

Inflation has peaked in major regions, but the pace of core inflation’s decline remains uncertain. Labor markets in the US and Canada are healthy but showing signs of loosening, with job additions slowing down and unfilled vacancies decreasing.

Macroeconomic Conditions

US economic growth has held up much better than expected with support driven by strong consumer spending

The US economy is holding up well with strong consumer spending but weak manufacturing data. A mild recession is predicted for 2024, while Canada’s growth may slow due to rising household debt costs, and Europe’s growth has stagnated with negative GDP growth in some quarters.

Shorter-term View

We see multiple potential paths for equity returns over the next 6-12 months


With an optimistic case envisioning a rise in S&P 500 index to 4,800-5,100 due to moderating inflation and possible rate cuts: A base case suggests a mild recession with a decline in the market to 3,900-4,300, while a pessimistic scenario foresees deeper declines of 15%-20% amid higher core inflation and global economic weakness. Given elevated equity valuations and macroeconomic risks, investors are advised to wait for a 10%+ equity market pullback before increasing their equity holdings.

Equity Markets

Equity markets appreciated by 6.2% with YTD gains of 16.3% through July 14th.

Equity markets rallied strongly with US stocks outperforming international markets. The broadening of the rally was driven by positive economic data and declining inflation, but uncertainty remains regarding H2 2023 and 2024 earnings due to several risk factors.

Fixed Income Markets

2-Year US Treasury yields increased from 4.2% to 4.8% presently

Safe fixed income declined modestly in Q2 as interest rates increased. High yield bonds and leveraged loans appreciated YTD, but credit stress signs are emerging with increasing default rates.

Alternatives and Private Investments

The HFRX Hedge Fund Index was up 0.7% both in Q2 and YTD

Hedge funds had modest gains in Q2, with real estate showing mixed results and the office sector facing increasing defaults. Private equity performed well in 2022 and likely continued positively in 2023, while venture capital saw a decline but valuations stabilized, and down-rounds increased due to cash funding needs.

Actionable Investment Opportunities

  • Short-term US and Canadian government debt

  • Private Equity Secondaries

  • Private Credit (offering potential returns from low double-digits to mid-to-high teens)

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