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Quarterly Investment Review Letter 2015 Q2

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Let's get to business immediately. The TSX finally topped out this June 20th, breaking the previous 2008 high. The luster was but a flash though, with the backslide leaving TSX down again one day after Canada Day celebrations. Think about this for a moment. Six years to the month after the 'crash', the TSX breaks through momentarily, only to slip-slide again. Comparatively, the Monthly High Income (MHI) fund broke through its previous 2008 high in 2010 in less than 24 months and has never looked back. Amazing recovery and consistency! Since then MHI has increased by nearly 50% in simple terms. This cannot be ignored but nor can we ignore the fact that the fund is at a virtual standstill year-to-date. 

 

That said, on the downside the MHI fund experiences are significantly less volatile relative to the market. On the upside, MHI continues to capture 104% of the market with 9.2% rate of return (ROR) since inception.  The Value Style continues its long, consistent history with preservation of capital as a commitment. That said, this year is likely to be a slow-go year. The expectation of 6.5% ROR continues to be the target to meet.

 

According to 'TD Economics', June 18, 2015: "In our view the worst is likely behind us." 

 

This might be taken, I suggest, with tongue in cheek. It is, after all, the kind of comment that was offered by some of the same pack of 'experts' who in 2008/09 suggested that the recession could be short-lived.  As well, there were predictions then that interest rates would be rebounding around the next corner. Well, the truth is that neither of these circles has been squared to date.

 

What do I as one voice know? Really! Good question.  I do though say again, that these are 'the good old days' and that slow growth global dislocations are 'normal'.  Think Greece…think China…and think our Canadian economy on the cusp of no growth.

 

However, throughout all of the volatility and global unpredictability, the Value Style at Manulife and at Cardinal Capital continues remarkably to deliver the consistency rarely found in markets of late.