RGMP Connected Wealth Tactical Class Commentary
February 11, 2016
Equity markets were extremely tranquil in August, a welcome change from years past, with Canada and the U.S. markets roughly flat on the month. Equity markets are at all-time highs in the U.S. and at multi-year highs in Canada, after a very impressive run during the past six months. With little volatility, the Tactical Class Fund was relatively quiet during the month. Early in August, the equity weighting increased from 75% to 85%, where it sat until we sold 10% U.S. equity as September began. With the markets trading relatively flat during the month, there was clearly a loss of momentum, which signaled a reduction in equity.
We do wonder if a very quiet summer will lead to a bumpier fall. There are certainly lots of moving parts. The economic backdrop has improved, as have earnings relative to the past few years. However, we now appear poised for another rate hike in the U.S. Bond yields have been trending higher and this is changing the leadership in the market from the more interest rate sensitives to other sectors. Throw on valuations at elevated, yet not extreme, levels and what is shaping up to be one dramatic U.S. election, this tranquility is unlikely to last.