Despite each of the portfolios ending the month in positive territory, each lagged their respective benchmark.
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Within fixed income, the Dynamic Advantage Bond Fund was the biggest detractor from performance. It gained a modest 0.14% in July, which lagged the 0.63% rise in the DEX Universe Bond Index. Given the fund’s positioning, with a much shorter duration this underperformance, while disappointing is not surprising. The main reason I like the fund is that it is defensively positioned, which will help to preserve capital when yields are under pressure.
Within the equity funds, it was the CI Black Creek Global Leaders that was the biggest laggard, losing 0.66%, while the MSCI World Index rose by 0.40%. This is a fund that is dramatically different than its benchmark. It has a more all cap focus, which likely hurt performance, as small and mid-caps were hit especially hard in July.
The biggest positive in the month was the Fidelity Canadian Large Cap Fund. With its concentrated portfolio, combined with a focus on both quality and valuation, it managed to outpace the S&P/TSX by a significant margin.
Looking at our Tactical Portfolios, I made some minor tweaks to the mix of the Conservative and Moderate Balanced Portfolios. In the Conservative Portfolio, I sold out the Manulife Strategic Income position and increased the weightings in the more Canadian focused bond funds. This was done to try to take a bit of risk off the table in light of the current environment.
With the Moderate Balanced Portfolio, I looked to reduce expected risk without negatively affecting return. To do this, I slightly reduced the Fidelity Canadian Large Cap Fund, and the CI Black Creek Global Leaders, and added some exposure into the defensively positioned Ivy Foreign Equity Fund.