Noteworthy Developments: Global equities, as represented by the MSCI ACWI Index, appreciated 4.9% (+3.6% in USD), with positive performance across all major regions. The CAD weakened by 1.3% vs. the USD.
Global Equities: Global equities increased by 4.9% (+3.6% USD), with US large-cap equities (S&P 500) up 4.9% (+3.6% USD), international developed equities up 3.2% (+1.9% USD) and emerging market equities gaining 8.6% (+7.2% USD).
The strong performance of the S&P 500 was driven by ongoing positive AI sentiment and positive sentiment surrounding Fed rate cuts. The Magnificent Seven outperformed again and were up 9.9%. The outsized gains in emerging markets were primarily driven by strength in China, Taiwan, and Korean equities (+10.9% to +11.9%), which benefitted significantly from technology stocks with significant cloud and semiconductor exposure associated with AI.
Globally, growth stocks (+6.3%) outpaced value stocks (+3.6%) once again. Almost all sectors delivered positive performance. Technology and communications services sectors (+9.2% and +6.6%) performed best, while consumer staples and energy (-0.5% and +1.3%) performed worst.
Fixed Income: Canadian fixed income declined in December, with the Canada Broad Market Index down 1.3%, as bond yields rose across the yield curve. Canadian government bond yields rose by 5-30 bps across the curve, with the yield curve steepening as yields rose more for intermediate- and longer-dated bonds than for shorter-term maturities. Canadian government bonds declined 1.4%, investment-grade corporate bonds fell 0.6%, and provincial bonds declined 1.7%.
Alternatives: The HFRX Global Hedge Fund Index was up 2.8% (+1.5% USD), with all major strategies delivering positive performance. Global macro / trend following (+4.8%) and convertible arbitrage (+4.0%) strategies performed best.
Manager Comments:
Carrhae: +11.5%: Outperformed the EM Index (+8.6%) with performance driven by exposure to idiosyncratic positions with exposure to AI and gold mining.
Starboard: 0.0%: Underperformed HFRX Index (+2.8%) and Russell 2000 Index (+4.6%) due to general weakness in certain catalyst-oriented names (catalysts yet to play out) and sharp declines in Kenvue position due to negative headlines regarding Tylenol and linkage to potential autism.
CAD September Market Commentary
Noteworthy Developments: Global equities, as represented by the MSCI ACWI Index, appreciated 4.9% (+3.6% in USD), with positive performance across all major regions. The CAD weakened by 1.3% vs. the USD.
Global Equities: Global equities increased by 4.9% (+3.6% USD), with US large-cap equities (S&P 500) up 4.9% (+3.6% USD), international developed equities up 3.2% (+1.9% USD) and emerging market equities gaining 8.6% (+7.2% USD).
The strong performance of the S&P 500 was driven by ongoing positive AI sentiment and positive sentiment surrounding Fed rate cuts. The Magnificent Seven outperformed again and were up 9.9%. The outsized gains in emerging markets were primarily driven by strength in China, Taiwan, and Korean equities (+10.9% to +11.9%), which benefitted significantly from technology stocks with significant cloud and semiconductor exposure associated with AI.
Globally, growth stocks (+6.3%) outpaced value stocks (+3.6%) once again. Almost all sectors delivered positive performance. Technology and communications services sectors (+9.2% and +6.6%) performed best, while consumer staples and energy (-0.5% and +1.3%) performed worst.
Fixed Income: Canadian fixed income declined in December, with the Canada Broad Market Index down 1.3%, as bond yields rose across the yield curve. Canadian government bond yields rose by 5-30 bps across the curve, with the yield curve steepening as yields rose more for intermediate- and longer-dated bonds than for shorter-term maturities. Canadian government bonds declined 1.4%, investment-grade corporate bonds fell 0.6%, and provincial bonds declined 1.7%.
Alternatives: The HFRX Global Hedge Fund Index was up 2.8% (+1.5% USD), with all major strategies delivering positive performance. Global macro / trend following (+4.8%) and convertible arbitrage (+4.0%) strategies performed best.
Manager Comments:
Carrhae: +11.5%: Outperformed the EM Index (+8.6%) with performance driven by exposure to idiosyncratic positions with exposure to AI and gold mining.
Starboard: 0.0%: Underperformed HFRX Index (+2.8%) and Russell 2000 Index (+4.6%) due to general weakness in certain catalyst-oriented names (catalysts yet to play out) and sharp declines in Kenvue position due to negative headlines regarding Tylenol and linkage to potential autism.
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