A year ago, I wrote: “As we entered 2025, few people suspected the sheer volume of turbulence we have encountered since inauguration day in the United States.” Oh, the good old days. With another war in the mid-east this time, and daily changes on whether the Gulf of Hormuz will be open, we now have wildly fluctuating oil prices. Perhaps the only bright spot, at least temporarily, is the decline in daily deluge that has been the threat of more tariffs.
This added uncertainty played out with continued, and more prevalent volatility in the markets. Each of the TSX, DJIA and S&P500 indices had variability (as defined by the difference between the high point of the quarter vs. the low point) of more than 10% in the quarter. And it wasn’t just equites. 2-year and 10-year interest rates saw similar volatility. Unhappily, bond prices also fell during the quarter. In such an environment, the returns for the quarter are impacted more by the news in the last few days than by any long-term trends.
Unfortunately, the end of March was marked by another downturn. The Dow and Nasdaq indices were down 4.2% and 4.8% respectively. Fortunately, the TSX was up by approximately 2%. These returns would have been higher positive had the quarter been shifted by a week or two.
Against this backdrop, a loss of of2.3%, while disappointing, looks not unreasonable. This with only 17% of our holdings being Canadian equities. Our managers performed as they were supposed to, providing protection in volatile markets.
Ontarians don’t get a vote in the U.S. midterms, so all we can do is watch the show and hope for more stability.