LATEST INSIGHTS
Thoughts, insights and opinions from our team of investment experts.
A Constant Battle
Successful investment strategies are dependent on a robust infrastructure. Outperformance is the accumulation of many small edges, so every component of the investment process is critical, and must be continuously analyzed for areas of improvement.
Anyone Feel Like Hibernating?
Animals hibernate for self preservation—to conserve energy during adverse conditions. But then they emerge, ready for the more bountiful period that awaits.
While we still see an economic setback ahead, and a commensurate market reaction, we expect markets to discount the pending recession, and then once again focus on recovery. In the meantime, we are hibernating—hedging portfolios (afraid of market declines) and buying undervalued, high-quality, recession-resistant companies below our estimated FMVs.
Extending Duration
We expect the Bank of Canada to stand pat with interest rates, and there’s a strong possibility of cuts starting in 2024. Consequently, we have switched our duration stance from below benchmark to above; we’re now targeting investment grade bonds with duration greater than 7 years.
RJ Steinhoff, CFA on the Investment Grade Income Model
As safer and less volatile income securities, investors cannot expect the same total return that other income alternatives like high yield bonds, high dividend yielding equities, real estate, or infrastructure provide over an expansionary economic cycle. However, over the entire economic cycle, investment grade income serve as an important component within a portfolio, providing reliable income and low volatility and default rates.