What does the election result mean for your investments?
The five-week campaign gave us plenty to consider. But what happens next?
Election Analysis
Mark Carney and the federal Liberal party are in the very early days of leadership, but by combining what we know about the key people, and the external conditions, we can offer this analysis.
“This minority government may face a policy environment similar to recent years, where the Liberals must negotiate with the NDP and Bloc to pass specific policies,” says Kai Lam, JCIC Chief Investment Officer. “Nonetheless, the government is expected to continue significant spending, likely increasing deficits and debt levels.”
Lam goes on to explain that market reactions to the election were modest, with Canadian government bond yields rising slightly. Expectations for additional interest rate cuts this year remained unchanged, and the Canadian dollar showed little movement. The S&P TSX Composite Index also experienced minimal fluctuation.
“The election outcome may pose incremental challenges for the Canadian oil and gas sector, given that current emissions and production cap policies remain in effect. However, companies in the renewable energy sector could benefit.”
— Kai Lam, JCIC’s Chief Investment Officer
Lam says the election results will not significantly change JCIC’s investment strategy. We have already been taking a defensive approach in Canada due to the risks associated with a trade war with the U.S.. This strategy has proven effective: our Canadian equity portfolio has increased by 3.7% year-to-date, outperforming the S&P TSX Composite Index's total return of 1.4% by 230 basis points. Additionally, in 2024, our Canadian equity portfolio rose by 29.1%, outpacing the TSX total return of 21.6% by 750 basis points. (All values reported are gross of fees, and as of the end of April.)
Among our top-performing Canadian stocks this year are Agnico Eagle Mines Ltd +44.7% (gold), Dollarama Inc +21.4% (dollar stores), Hydro One Ltd +20.6% (electricity transmission), Loblaw Companies Ltd +18.6% (grocery stores and pharmacies), Constellation Software +11.8% (enterprise software), Thomson Reuters Corp +11.5% (business information services), and Waste Connections Inc +10.6% (waste management).
“These high-quality companies offer resilience in the economy, business visibility, and strong cash flow,” according to Lam. “We have generally sought to minimize investments in companies directly affected by trade war risks. However, we have seized opportunities to acquire stocks unfairly punished by macroeconomic concerns while maintaining sound fundamentals.”
It all adds up to a cautious, but optimistic outlook for the months ahead.
Summer is just around the corner
As the days get longer and warmer we are looking forward to the return of Toronto Summer Music. JCIC sponsored the program for many years and hosts an annual dinner event that is followed by a TSM concert. Our connection with the organization goes back 20 years.
“TSM’s founder, David Beach, who at the time was the Dean of the University of Toronto’s Faculty of Music, was a client of JCIC. His concept was to mount a summer program giving music students and graduates who showed the prospect of having successful performance careers, the opportunity to train with established professionals and perform for Toronto audiences.”
— Stephen Smith, director and shareholder, JCIC
The TSM student program is tuition-free. Students are also provided with housing and transportation for the month-long festival. Students are chosen by audition and come from across Canada and from many other countries. The TSM festival also includes a community outreach program in which groups of amateur musicians are invited to perform with and be coached by TSM’s professional faculty.
In addition to its ticketed concerts at Koerner Hall and Walter Hall there are a number of free community performances at other venues in the city.
For more information about the Toronto Summer Music please visit their website.
More than returns
JCIC has an astounding record of retaining clients for decades. Michelle Burandt, one of JCIC’s Relationship Managers, offers some insight as to why people choose to stay with the firm for so long.
Upcoming dates to remember
Sunday, May 11th – Mothers’ Day
Monday, May 19th – Victoria Day
Monday, May 26th – Memorial Day (US)
Monday, June 16th – Deadline for Self-Employed Individuals to file their tax returns
Disclosure:
Although we obtain information contained in our newsletter from sources we believe to be reliable, we cannot guarantee its accuracy. The opinions expressed in the newsletter are those of JCIC Asset Management, its editors and contributors, and may change without notice. Any views or opinions expressed in the newsletter may not reflect those of the firm as a whole. The information in our newsletter may become outdated and we have no obligation to update it. The information in our newsletter is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is provided for information purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor or a group of investors. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. We strongly advise you to discuss your investment options with your Relationship Manager prior to making any investments, including whether any investment is suitable for your specific needs.
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