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Normandin Beaudry

Review of the institutional fund performances over the first semester of 2011

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There, in black and white

NB Bulletin Vol. 14 N. 7, August 2011

We are pleased to present our mid-year review analyzing the performance as at June 30, 2011, of institutional managers comprising the Normandin Beaudry Investment Funds Universe. The purpose of this review is to keep you up-to-date on the recent performance of financial markets and institutional managers. You will receive this review each year after the end of the first semester.

Institutional managers included in the Normandin Beaudry Investment Funds Universe must have an active portfolio management approach, a performance history of at least three years and must manage a minimum of assets. All performance statistics are presented before management fees.  

Balanced Fund

The median return for balanced funds for the first half of 2011 was 1.38%, and first quartile performance for these funds showed a return of more than 2.77%.

Canadian Assets

Performance of Canadian assets –From January 1st to June 30 2011


Category

Canadian
Bonds

Canadian Equities
(Large Cap)

Number of funds

46

59

Benchmark

DEX Universe

S&P/TSX

Benchmark return

2.20%

0.16%

Benchmark percentile rank

72

42

Median

 

 

Return

2.36%

-0.14%

Value added

0.16%

-0.30%

First quartile

 

 

Return

2.56%

2.00%

Value added

0.36%

1.84%


On the bond market, interest rates increased during the first quarter of 2011 while the opposite occurred during the second quarter of the year. Bonds with a maturity of 5 to 10 years generated the best returns in the first half of 2011. The performance of bond managers compared to the benchmark for the first half of 2011 are primarily explained by duration management, i.e. portfolio positioning on the yield curve, and off index exposure (Real return bonds (4.59%) and CMBS (3.97%)).

Large cap Canadian equities posted a return of 0.16% during the first semester of 2011. The value added by the median manager was -0.30% compared to the benchmark. This can be explained in part by the performance of some important stocks within the index. Overweight in stocks like Cameco (-37%), Kinross (-20%), Barrick Gold (-18%) and Research in Motion (-52%) can explain an important portion of the subtracted value of several investment managers. It should also be noted that large cap securities (S&P/TSX 60: 0.59%) outperformed small cap securities (BMO Small Cap Index: -5.60%). Lastly, the first quartile manager was able to generate a good value added, outperforming the S&P/TSX index by 1.84%.

Foreign Assets

Performance of Foreign assets –From January 1st to June 30 2011


Category

U.S.Equities

International Equities

Global Equities

Emerging Markets Equities

Number of funds

79

74

60

36

Benchmark

S&P 500

MSCI EAEO
(net)

MSCI Monde
(net)

MSCI ME
(net)

Benchmark return
(Canadian dollars)

2.80%

1.78%

2.08%

-2.19% 

Benchmark percentile
rank

53

65

52

52

Benchmark return
(local currency)

6.03% 

0.18% 

2.93% 

-2.05%

Median

 

 

 

 

Return

2.84%

2.58%

2.33%

-1.95%

Value added

0.04%

0.80%

0.25%

0.24%

First quartile

 

 

 

 

Return

4.66%

3.56%

3.91%

-0.97%

Value added

1.86%

1.78%

1.83%

1.22% 


The median US equity manager generated a value added of 0.04% compared to the S&P 500 index. We can also note the good value added of the first quartile manager at 1.86%. Due to the appreciation of the Canadian dollar compared to the US dollar (3.1%), returns converted into Canadian dollars were lower. With respect to international equities, the median manager generated a value added of 0.80%. To obtain a first quartile performance, the manager needed to add more than 1.78% compared to the MSCI EAFE. The depreciation of the Canadian dollar relative to the Euro (4.9%) and the Swiss Franc (7.1%) increased returns of investors when converted into Canadian dollars.

As for global equities, the median manager added 0.25% during the first half of 2011. The first quartile manager added 1.83% compared to the MSCI World Index. To add value, global equity managers had to underweight Japan (-7.7%) who experienced a difficult semester due to the uncertainty of the effects of the tsunami. Moreover, the decision to overweigh the United States was beneficial to global equity managers. It should also be noted that large cap securities slightly outperformed small cap securities in the international market, while in the United States, mid cap securities generated the highest returns.

Finally, the median emerging markets equity manager added 0.24% during the first half of 2011. The first quartile manager added more than 1.22% compared to the MSCI Emerging Markets Index.

 

Please feel free to contact us for additional information.

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