CAD May Market Performance

Noteworthy Developments

Global equities rose sharply as the MSCI ACWI Index increased 2.9% (4.0% USD) driven by strong corporate earnings coupled with favorable inflation data relative to expectations. The CAD strengthened by 1.1% vs. the USD.

Global Equities

Global equities increased 2.9% (4.0% USD) with developed markets sharply outperforming emerging markets. The S&P 500 was up 3.8% (4.9% USD) as investors embraced strong corporate earnings and better than expected inflation data. US Treasury yields declined by 18bps during the month as inflation reports were more favorable than anticipated and job market data indicated modest cooling. International developed equities (MSCI EAFE Index) were up 2.7% (3.9% in USD and 2.5% in local currencies) with European equities up more than Japanese equities. European economic data has been better than expected with many countries showing a modest return to growth. Emerging market equities were down -0.5% (0.5% in USD) with gains from Chinese and Taiwan equities offset by losses in Brazilian and Mexican equities. Globally, growth stocks (4.0%, and 5.1% in USD) outperformed value stocks (1.8%, and 3.0% in USD). Most sectors appreciated during the month in USD terms. Technology, utilities, and communications services performed best (6.8%, 5.9%, and 4.6% in CAD, respectively) while consumer discretionary and energy sectors performed worst on a relative basis (respectively, -1.6% and -1.0% in CAD and 0.5% and 0.2% in USD).

Fixed Income

The ICE BOFA Canada Broad Market Index was up 1.8% as interest rates declined during the month. Government bonds were up 1.4%, provincial and municipal bonds were up 2.2%, and corporate bonds were up 1.4%.

Alternatives

The HFRX Global Hedge Fund Index was down -0.5% (0.6% in USD), though most strategies delivered positive performance in USD terms. Long-short equity and convertible-arbitrage strategies performed best (respectively, 0.2% and -0.1%, and 1.3% and 0.9% in USD). Merger arbitrage and global macro / trend following strategies performed worst (respectively, -1.8% and -1.6%, and -0.7% and -0.5% in USD).

Manager Comments

Alphadyne: +0.8% and +1.9% USD

Outperformance vs. HFRX index (-0.5% and +0.6% in USD) and global macro strategy index (-1.6% and -0.5% in USD) due to a combination of payoffs on directional interest rate trades coupled with positive performance from relative value trades as well.

Carlson: -2.0% and -0.9% in USD

Underperformed HFRX index but performed in line with merger arbitrage strategies (-1.8% and -0.7% in USD). Merger spreads widened during the month due to perceived increased regulatory scrutiny (especially in the US with the FTC and DOJ lengthening times for review).

Russell 1000 Growth ETF: +4.9% and +6.0% in USD

Outperformance vs. MSCI ACWI Index (+2.9% and 4.0% in USD) driven by higher exposure to US stocks and especially within the technology and communication services sectors. Larger exposure to Nvidia (+26.9%) was a key performance driver.