December 2012

Evolution of the market in 2012

For a second consecutive year, the Canadian stock markets were difficult and demonstrated one of the weakest performances compared to the major foreign markets. The Canadian index being mainly concentrated in resources and energy, the correction incurred in these areas has helped diminish the stock market returns to the Canada. The uncertainty over the austerity measures in Europe, the dealings of American politicians with respect to the level of the deficit and growing debt in the United States, tensions in the Middle East contribute to increase the volatility of the markets. Despite this negative environment, markets have rebounded in the second half of the year, anticipating a relief at the level of the economy.

Variation in 2012

S & P/TSX (Canadian market) 4 %
S & P 500 (US market) 13.40 %
MSCI World (global index) 13.18 %
MSCI emerging markets 15.15 %

The Canadian dollar fluctuated between 0.96US and 1.03US to finish slightly to parity at the end of the year.

Performance of the portfolio balanced

The overall performance of the portfolio balanced for the year 2012 amounted to 7.51% versus the comparable to 3.38% index. The choice of more defensive securities has borne fruit as well as the strategy to increase the titles in preferred shares in order to increase significantly the portfolio income.

Prospects for the year 2013

We expect to live yet another year of high volatility. The fundamental problems of the major developed economies are the debt of Governments, production overcapacity and the level of population ageing make difficult choices necessary and may increase the clash between generations. We enter into an era of global management of decrease of services while looking for the optimization of resources. Thus, it will be interesting to follow the progress of the discussions on the debt in the United States…

The financial structure of large companies was considerably improved during the past few years, we expect a gradual return to the level profitability. Even if unemployment is likely to remain still high for a certain period, the record level of liquidity held by companies and individuals should be used at the slightest sign of economic recovery.

We continue to encourage investment in high-quality companies, preferably those that are positioned to take advantage of growth continues emerging economies and who make interesting dividends. At the level of fixed-income securities, we prefer the deadlines shorter term taking into account the increased risk of capital loss in the event of a rise in interest rates.

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