CAD April Market Performance

Noteworthy Developments

Global equities retreated as the MSCI ACWI Index declined 1.6% in CAD (-3.3% in USD). A sharp rise in US interest rates driven by higher-than-expected inflation overshadowed strong corporate earnings.  The CAD weakened by 1.7% vs. the USD during the month.

Global Equities

Global equities declined 1.6% in CAD (-3.3% USD) with significant differences in performance between regions. The S&P 500 was down 2.4% in CAD (-4.1% USD) as US Treasury yields sharply increased by 40bps-50bps across the curve.  The yield increases were driven by higher-than-expected inflation reports which has led to investors adjusting expectations for fewer rate cuts in 2024 than originally forecast.  International developed equities (MSCI EAFE Index) were down 0.9% in CAD (-2.6% in USD) with Japanese equities down more than European equities. Emerging market equities were up 2.2% in CAD (+0.5% USD) with strong performance from Chinese equities (+8.5% in CAD and +6.6% USD) driven by better-than-expected Chinese growth and monetary stimulus. Globally, both growth (-1.8% in CAD and -3.5% USD) and value stocks (-1.3% CAD and -3.0% USD) experienced declines. Almost all sectors experienced declines during the month with technology performing worst (-3.6% CAD and -5.3% USD). Energy was the only sector delivering positive performance at +2.4% CAD (+0.6% USD).

Fixed Income

The ICE BOFA Canada Broad Market Index was down 1.9% in CAD during April as interest rates rose 20bps-30bps across the curve during the month. Government bonds were down 1.7%, provincial and municipal bonds were down 2.4%, and corporate bonds were down 1.2%.  

Alternatives

The HFRX Global Hedge Fund Index was up 1.2% in CAD for the month (-0.5% in USD), with substantially all strategies delivering negative performance in USD terms. Merger-arbitrage (flat CAD and -1.7% USD) and convertible-arbitrage (+0.2% CAD and -1.5% USD) strategies performed worst.

Manager Comments

North Rock

+3.1% CAD (+1.4% USD): o utperformance vs. HFRX index (+1.2% CAD and -0.5% USD) due to idiosyncratic performance across both long and short equity bets across various sectors.  

Waterfall

+3.1% CAD (+1.4% USD): outperformance vs. HFRX index (+1.2% CAD and -0.5% USD) due to spread tighte ning across Waterfall’s sectors and across idiosyncratic structured credit positions.