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Portfolio Manager’s May Comment for April Results

The S&P/TSX increased by 10.8% in April and the S&P500 increased by 12.8% while the MSCI ACWI ex USA gained 7.6%. At the end of the 12-month period ending April 30th, the S&P/TSX was posting a negative return of 7.9%. Over the same 12-month period, the S&P500 gained 0.9% while the MSCI ACWI ex USA posted a decline of 11%. For the U.S and Canadian markets April results were the best monthly returns of the past decades. Over the past 12 months, the strong performance behind the U.S equity market can be explained by its 5 largest technology names (Microsoft, Facebook, Amazon, Apple and Google).
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The best TSX sectors for the month of April were Materials up 33%, followed by Information Technology up 29.3%, and Consumer Discretionary up 20.1%. The worst performing sectors were Telecommunication Services (-0.3%), Financials (0.9%) and Utilities (3.7%).

The best monthly performers in the portfolio were Kirkland Lake Gold (39.1%) and Parkland Fuel Corp (33.1%). At the opposite, the weakest contributors were Great-West Life Co, which was down 5.7% and Royal Bank of Canada down 1.8%.

4 stocks were sold and bought in the strategy, in April. For this rebalancing, the model required an exposure reduction to 2 sectors namely Consumer Discretionary and Energy. MTY Group (MTY) was sold for several reasons including its negative exposure to the COVID-19 pandemic, Parex Ressources (PXT) was sold as weak oil prices put severe pressure on its margins.

The model called for the selling of Brookfield Asset Management (BAM.A) and Brookfield Infrastructure Partners L.P. (BIP.UN) due to a deterioration of their respective performance scores.

The model also required an increased exposure to Materials and Financials. The names that made it into those sectors were Winpak (WPK) and First National (FN). The other 2 names purchased in this rebalancing were Fortis (FTS) as a replacement for Brookfield Infrastructure Partners L.P. (BIP.UN) and Sun Life Financial as a replacement for Brookfield Asset Management (BAM.A).