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.

– or click a specific topic on the right

Capital Markets

In Q3, equities dipped 3.4% but are up 11.2% YTD. Rising bond yields impacted US stocks, while international equities felt pressure from Europe and China. Bonds faced challenges, but high-yield assets remained resilient. Hedge funds saw modest growth, while private equity hinted at promising gains. In this environment, we see US Treasuries and certain private investments as offering the most attractive risk-adjusted returns.

Strategic Asset Allocation View

Declining interest rates, labor shortages, and rising energy prices stand out

Geopolitical tensions, especially between the US and China, loom large. While equities might yield 6.5%-8.0% annually, “Safe” fixed income, especially US 10-Year Treasuries, is attractive. As the Fed rate hike cycle nears its end and AI’s potential growth looms, we see fixed income offering compelling risk-adjusted returns compared to equities.

Asset Class: Strategic Outlook


Fixed Income

Alternatives, Private Equity & Real Estate

Macroeconomic Conditions

The US economy shines amidst global challenges, but 2024 might tell a different story.

Canada shows signs of strain, Europe flirts with recession, and China’s consumer boom contrasts with its property woes. Inflation concerns persist globally. How will central banks react?

Shorter-term View

In 2023, US equity markets rallied, but future performance hinges on corporate earnings and inflation.

Three scenarios are: Optimistic with the Fed cutting rates in 2024, potentially boosting the S&P 500 to 5,300; Base Case, indicating a mild recession and an S&P 500 recovery to 4,700; and Pessimistic, where inflation drives more Fed hikes, leading to a 20% S&P 500 drop. We advise caution when considering additional equity investments. 
Equity Markets

3.4% dip in global stocks, but there's an 11.2% YTD rise

While value stocks made a Q3 comeback, tech-driven growth leads the year. The S&P 500 mirrors this trend, thanks to tech giants. Challenges arise internationally, especially in Europe and China. With US corporate earnings poised to grow and valuation debates heating up, is corporate credit the safer bet?

Fixed Income Markets

Fixed income dynamics shift as interest rates rose, impacting US Treasuries.

High yield bonds and leveraged loans shine this year, with particularly risky HY bonds standing out. Current yields vary, with investment-grade corporate bonds at 6.0%. But as spreads tighten and credit stress emerges, are we looking at a 4.5% default rate by June 2024?

Alternatives and Private Investments

HFRX Hedge Fund Index gained 0.5% in Q3 rising 1.3% for the year

Convertible arbitrage soars, but office real estate wavers with higher 4.5% default rate. While private equity thrives YTD, buyout values and exits dip. Venture capital steadies, but with increased down-rounds. Instacart and Klaviyo’s IPOs marked Q3, though at slashed valuations.

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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