PIM: SRI Core Income and Growth Portfolio

Paul Borisoff - Oct 02, 2018

PIM: SRI Core Income and Growth Portfolio – October 2nd, 2018


The SRI Core Income and Growth Portfolio* was down 0.4% in September - leaving the portfolio up 3.3% in 2018 – and up 8.3% over the last year. In comparison our benchmark was down 0.6% in September – leaving it up 4.7% in 2018 – and up 9.7% over the last year.


* These returns are reported as a composite, time-weighted, rate-of-return (gross of fees, net of transaction charges) for all accounts in this mandate. Long-Term Returns/Benchmark Numbers will be reported in our Quarterly Updates.


Canadian bond market (FTSE/TMX Canada Universe Bond Index) dropped 1.0% in September – keeping with its recent zig zag pattern of quickly giving up gains after positive advances - and is now negative in 2018 again – down 0.4%. Over the last twelve months bonds are now up 1.7% though – in-line with the three-year average return of 1.6% per year. We still do not see much room for improvement going forward on this asset class – with the possibility of negative returns over certain periods if rates move sharply higher.


The Canadian stock market (S&P/TSX Composite Total Return Index) was down 0.9% in September– leaving it now up 1.4% in 2018. Over the last year the Canadian market is up 6.0%.


The MSCI World Net (USD) Index (50% of our benchmark) was down 0.4% in September – and is now up 8.6% in 2018. Over the last twelve months this index is up 15.3% (after adjusting for the Canadian dollar impact).


Canadian dollar moved higher in September – to $0.7747 CAD/USD from $0.7669 at the end of August - putting pressure on our non-Canadian holdings in the month – and also in the quarter as it moved up from $0.7614 at the end of June. However, it is still lower on a year-to-date basis having ended 2017 at $0.7948 - and a year ago it closed at $0.8018 CAD/USD – with the decreases providing a boost to these holdings over these periods.


Asset Allocation – September 30th, 2018:


4.7% Cash, 17.7% Fixed Income, 28.4% Canadian Equity, 49.2% Global Equity.


Recent Updates:


We adjusted our fixed income holdings once again in September. sold our 2.7% position in the BMO Long Provincial Bond Index ETF and initiated a new 2.5% position in the BMO Long Federal Bond Index ETF. This position is being held as a small hedge – and is expected to slightly reduce the overall portfolio volatility as these long bonds typically move higher on significant stock market corrections. Note, our total return on our original BMO Long Provincial Bond Index ETF was a slight gain of approximately 1.5% accounting for a previous sale, and interest payments received.


We also increased our exposure to the NEI Global Total Return Bond Fund to 12.0% from 10.0% as our primary fixed income exposure. The managers of this Fund – Amundi Asset Management out of Europe – continues to post above average fixed income returns – and fully utilize all of the various levers to add value in this area – including currency overlay strategies.


Our next quarterly summary and commentary will be available by Friday, October 12th. In the and meantime, please do not hesitate to contact me if you have any question or concerns.




Paul J. Borisoff

Senior Vice President

Portfolio Manager, Senior Investment Advisor