August 2021 Portfolio Management Team Update

Elvis Picardo

August 12, 2021

Market & Economic Environment

Global equities turned in a mixed performance in July, with North American and European indices adding
to their substantial gains from the first half of the year, while some major Asian bourses including Hong
Kong, China and Japan posted significant declines for the month.

The TSX advanced 0.61% last month, bringing its year-to-date gain to 16.4%. There was significant
divergence in sector performance in July, with four of the index’s 11 groups finishing in the red. Gainers
were led by the consumer staples group, which surged 7% thanks to a double-digit advance by
convenience-store operator Alimentation Couche-Tard (which has a 47% weight in the sector). The real
estate sector rose 4.4%, while materials, technology, industrials, and utilities registered healthy gains.
Among decliners, plummeting cannabis-related stocks led to a 11% plunge in the health care group and
lower crude oil prices triggered a 5% drop in the energy sector.

U.S. indices rose in July, with the S&P 500 up 2.3% for a YTD gain of 17%. The Dow Jones Industrial Average
rose 1.3% in July and the Nasdaq Composite gained 1.2%, for YTD gains of 14.1% and 13.9% respectively.
Small-cap companies suffered a reversal of their first-half outperformance over large-cap stocks, with the
Russell 2000 tumbling 3.7% in July even as the Russell 1000 gained 2%.

(Data Source: FactSet)

Our Strategy

Although the TSX and S&P 500 continue to trade at record highs on the back of record corporate earnings
and robust consumer spending, markets may be hard-pressed to add to their stellar first-half gains.

Risk appetite has ebbed recently and may continue to decline in the next few months as we head into the
typically volatile months of late summer. The biggest risk factor for markets yet again seems to be the
coronavirus, or its delta variant to be precise. The market outlook for the remainder of the year appears to
be tied to the outcome of the grim race between the delta variant – which is surging worldwide primarily
among unvaccinated people – and the percentage of the population that is vaccinated.

The Portfolio Management Team (PMT) reviewed its asset allocation for client portfolios in June and did
not make any major changes as it was deemed appropriate for the current market environment. However,
the PMT remains vigilant about the heightened prospects for a pullback in the historically volatile August
to October period, and is well positioned to make tactical adjustments to client portfolios should a market
correction occur.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.