CAD November Market Performance

Noteworthy Developments

November saw massive rallies in equities and bonds.  Global equities (MSCI ACWI Index) rallied by 6.7% (+9.2% in USD) and bonds (ICE BOFA Canada Broad Market Index) appreciated by 4.2% in CAD.  Sharply falling bond yields, driven by favorable inflation data, helped propel the equity rally.  Markets were increasingly pricing in substantial rate cuts in the US and Europe during 2024.  The CAD strengthened by 2.3% vs. the USD during the month.

Global Equities

Global equities were up 6.7% in CAD (+9.2% USD) with widespread large gains across major regions.   The S&P 500 was up 6.6% in CAD (+9.1% USD) as Treasury yields declined significantly during the quarter driven by favorable inflation data and by slowing employment growth.  Lower than expected amounts of US Treasury bond auctions also contributed to falling bond yields.  US 10-year Treasury bond yields fell by a massive 58bps from 4.90% to 4.32% over the month.  International developed stocks (MSCI EAFE Index) were up 6.8% in CAD (+9.3% USD) driven by solid underlying appreciation and currency translation benefits as the USD weakened during the month.   European stocks rallied due to falling bond yields despite continued macroeconomic weakness in Europe.  Headline and core inflation also declined more than expected in Europe.  Emerging market equities (MSCI EM Index) were up 5.5% in CAD (+8.0% in USD) with Korean and Taiwan equities (+13.7% and 10.5% in CAD and +16.3% and +13.1% in USD).  Underlying solid performance in semiconductor stocks coupled with significant USD weakness relative to local currencies drove these sharp rallies.  .  Globally, growth stocks outperformed value stocks (+8.5% and +4.9% in CAD and +11.0% vs. +7.3% in USD) as growth stocks benefitted more from falling interest rates.  Technology, industrial, and communication services sectors performed best (+11.0%, +7.7% and +7.5% in CAD and +13.6%, +10.3%, +10.0% in USD) while energy, staples and healthcare performed worst (-1.4%, +2.0%, +3.3% in CAD and +0.9%, +4.4%, +5.7% in USD).

Fixed Income

As mentioned, the ICE BOFA Canada Broad Market Index was up 4.2% for the month in CAD with interest rate declines driving performance.  Government and corporate bonds were up 3.6% in CAD while provincial and municipal bonds were up 5.1% in CAD.   

Alternatives

The HFRX Global Hedge Fund Index was down 1.2% for the month in CAD (+1.1% in USD).  Directional strategies such as equity hedge and credit strategies performed best at +0.6% CAD (+2.9% USD) and -0.1% CAD (+2.2% USD) respectively.   Macro / trend following strategies performed worst at -3.9% CAD (-1.7% USD).

Commentary

Alphadyne:  -3.6% in CAD (-1.4% in USD)

Underperformed the HFRX Global Hedge Fund Index (-1.2% in CAD and +1.1% in USD) as November was a difficult month for macro hedge fund strategies (-3.9% in CAD and -1.7% in USD).   

Lancaster:  +10.1% in CAD (+12.7% in USD)

Outperformed the MSCI Europe Index (+7.1% in CAD and +9.6% in USD) due to strong performance from idiosyncratic individual positions such as certain airlines and retailers. 

Starboard: +4.8% in CAD (+7.2% in USD)

Outperformed vs. the HFRX Equity Hedge Fund Index (+2.9%) given idiosyncratic appreciation in activist positions coupled with higher net-long exposure.