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Normandin Beaudry

Institutional Investment Fund Performance

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There, in black and white

NB Bulletin Vol. 15 N. 11, August 2012

We are pleased to present our mid-year review analyzing the performance as at June 30, 2012, of the institutional managers comprising the Normandin Beaudry Investment Funds Universe.

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

Balanced Funds

The median return for balanced funds for the first half of 2012 was 2.98%, and first quartile performance for these funds showed a return of more than 3.66%.

Canadian Assets

  

On the bond market, interest rates increased during the first quarter of 2012 and decreased in the second quarter. Only 4th quartile managers failed to add value during the period. The value added by the majority of bond managers is primarily explained by the allocation of their corporate bond portfolio in relation to the benchmark.

Large cap Canadian equities generated a return of -1.53% in the first half of 2012. The value added by the median manager was 1.54% compared to the benchmark, which can be explained in part by the underperformance of stocks in the Gold and Mining and Metals subsectors in which institutional managers are generally underweighted. It should also be noted that large cap securities (S&P/TSX 60) outperformed small cap securities (BMO Small Cap Index). Finally, the first quartile manager generated substantial value added (3.63%) during this period.

Foreign Assets

      

The median U.S. equity manager subtracted 0.57% compared to the S&P 500 Index. The value added of the first quartile manager was 0.37%. Fluctuation of the Canadian dollar in relation to the U.S. dollar had little impact during the first half of 2012. With regards to international equities, the median manager generated a value added of 1.70%. To obtain a first quartile performance, the manager needed to add more than 3.15% compared to the MSCI EAFE. The appreciation of the Canadian dollar in relation to the Euro (2.2%) and the Japanese Yen (3.4%) decreased investors’ returns when converted into Canadian dollars.

With respect to global equities, the median manager subtracted 0.26% in the first half of 2012. The first quartile manager added 1.22% compared to the MSCI World Index. To add value, global equity managers needed to underweight the European zone and the Euro, and to overweight the United States. Another strategy for adding value was to underweight the Energy and Materials sectors.

Finally, the median emerging markets equity manager added 0.04% during the first half of 2012. The first quartile manager added more than 2.02% compared to the MSCI Emerging Markets Index.
 

 

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