June 2021 Pricing Commentary North American stock market indices reported positive investment returns for the month of June. Most interestingly, however, is that this performance did not emanate from the formerly top performing financial services/banking sector. Rather, significant appreciation materialized via high technology companies which had generally lagged during the first five months of 2021. This recovery was most eventful for our ABC Funds’ monthly and half year returns due to our meaningful sector weighting as this positioning enabled our portfolios to materially outperform our equity index benchmarks for the month of June. Our top three Canadian equity performers last month included Enbridge, Minto Apartment REIT, and Rogers Communications, which bolstered our returns. More importantly, the bulk of our June 2021 results can be attributed to seven U.S. stock outperformers including: Adobe, Amazon, Apple, Microsoft, NVIDIA, S&P Global, and Thermo Fisher Scientific. Having completed the first half of 2021, we reiterate our investment optimism which is based on: improving North American economic activity, continued favourable global monetary and fiscal stimulation, a steady recovery from COVID-19 and expanding worldwide vaccinations, improving corporate earnings and revenue guidance, and the elongation of the secular bull market in North American equities. Consequently, our ABC portfolios are fully invested as we expect these favourable equity stimulants to remain in place until at least the end of this year and into 2022. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
May 2021 Pricing Commentary While the ABC Funds prices for the month of May were mixed, there were a number of important positive developments indicating future ABC outperformance. For instance, NVIDIA, a top ABC Funds holding, reported better than expected Q1 earnings and excellent forward guidance, rising over 8.2% for the month. Additionally, NVIDIA declared a 4 for 1 stock split. Our Canadian bank holdings performed well coinciding with our expectation of continued price appreciation for the balance of 2021. Furthermore, it is important to mention that the funds’ Canadian dollar currency hedge protected our American asset exposure with the Canadian dollar’s appreciation of over 1.5 cents. In summation, we remain optimistic with regard to improving North American economic activity, a tangible recovery from the pandemic, and the elongation of the secular bull market for both U.S. and Canadian equities. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
April 2021 Pricing Commentary Equity prices continued their ascent during the month of April. All five ABC Funds outperformed their index benchmarks this past month due to the resurgence of our technology and healthcare holdings and our major commitment to U.S. common shares. Additionally, the funds’ Canadian dollar currency hedge significantly protected our American asset exposure with the Canadian dollar appreciation of approximately two and a half cents versus the U.S. Dollar this past month. Our American common stock outperformers during this month included: – Alphabet – Apple – Amazon – Boston Scientific – Danaher – Home Depot – Mastercard – Microsoft – NVIDIA – S&P Global – Visa – Zoetis Looking ahead, we continue to believe that we remain in a secular bull market for equities. Consequently, our ABC Funds have retained a fully invested portfolio positioning. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
March 2021 Pricing Commentary North American equity indices rose during the month of March adding to their 2021 run. Ongoing positive stock market influences include improving corporate earnings results, continued low interest rates with an upward sloping yield curve, strengthening global economic activity, an expanding COVID-19 vaccination rollout, and President Biden’s $2.25T infrastructure spending plan. We believe that these ameliorating factors will continue to provide upward share price momentum as we enter the second quarter of the year. Interestingly, common stock price appreciation last month was not uniform. For instance, two lagging sectors which we believe offer excellent relative undervaluation are the technology and healthcare sectors. It is our view that with a sustained 2021 general market advance those sectors should provide excellent future returns. All five ABC Funds appreciated over the past month with particular strength in Canadian equities. Our main outperforming Canadian holdings included: Bank of Montreal, Royal Bank, TD Bank, Brookfield Asset Management, TC Energy, Minto Apartment REIT, Northland Power, Emera, Fortis, and Waste Connections. Our top performing American equities included: McDonald’s, Facebook, Home Depot, Honeywell International, S&P Global, and Waste Management. Looking forward to the balance of 2021, we intend to remain fully invested in a blend of U.S. and Canadian equities combining attractive dividend yields, impressive earnings and revenue growth, as well as solid fundamental value. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
February 2021 Pricing Commentary A late month equity market sell-off due to concerns of rising bond yields appeared to worry investors. We believe, however, that this anxiety is transitory given that interest rates are still at exceptionally low levels, an estimated 75% of corporate quarterly earnings results have beaten expectations, and North American economic activity continues to recover. Interestingly, although our February 2021 ABC Funds performance was mixed to slightly higher, we were pleased with the relative appreciation of our U.S. and Canadian bank holdings, Manulife Financial, CN and CP Railways, Boston Scientific, Google, Mastercard, and Visa. Of particular importance was our currency hedge which protected our U.S. dollar asset exposure with the Canadian dollar’s pronounced late month strength. Additionally, we took advantage of the decline in equity prices and added new positions to our funds, which included: S&P Global and Zoetis. As we enter the month of March, we remain very optimistic with regard to the outlook of common stocks and our portfolio positioning. Notably, we believe that the early 2021 market weakness is temporary and expect North American equities to resume their upward price trend to year end. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
January 2021 Pricing Commentary While North American market indices were negatively impacted by temporary price volatility at the end of January, we believe that our portfolios are well positioned for the year. In fact, despite the slight January market setback, a number of our ABC Funds holdings rose over 5% during the month, including: TC Energy, Enbridge, Pembina Pipeline, Brookfield Infrastructure Partners, Alibaba, Tencent, Thermo Fisher Scientific, Danaher, and WPT Industrial REIT. Consistent with our positive economic and investment outlook, we intend to keep our portfolios fully invested in 2021. We are committed to our 1/3 Canada, 2/3 U.S. common share geographic weightings and will continue to hedge our currency exposure in a range of 70% – 100%. Our five portfolios are diversified in high quality large capitalization, dividend paying equities, which we expect to continue to outperform comparatively lower yielding fixed income securities. Furthermore, as the North American economies recover, we anticipate that many of these holdings will increase their dividend payouts and share buyback programs. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
