October was a mixed month for the major asset classes, with bonds finishing down, Canadian equities slightly higher, and global equities mostly lower in local currency terms. A drop in the Canadian dollar helped to push many foreign equities into positive territory for the month. In this environment, the portfolios all finished in negative territory.
For a review of the portfolios’ performance, you can download our standard monthly portfolio report here. For those looking for even more detail, I am also providing additional reports generated from Morningstar which show even more detail regarding the portfolios. A summary report can be downloaded here, while the more detailed report can be downloaded here.
The worst performer was our Balanced Growth Portfolio, which was down 0.4% on the month. Most of this underperformance can be attributed to the more conservative positioning of many of its holdings including the Mackenzie Ivy Foreign Equity Fund, Fidelity Small Cap America, and Sentry Small and Mid-Cap Income Fund. In each case, the funds’ respective focus on quality holdings resulting in them being left behind, as it was the more cyclical sectors such as energy, and financials that led the markets higher.
The best performing portfolio was the Balanced Portfolio, which was down by 0.16%, modestly outpacing its benchmark. A strong showing from the defensively positioned Dynamic Advantage Bond, and the growth focused TD U.S. Blue Chip drove the outperformance to its benchmark. But losses from the Mackenzie Ivy Foreign Equity and the Sentry Small and Mid-Cap Income Fund were the anchors keeping the fund in the red.
Turning to the future, I remain positive on the positioning of the portfolios despite the recent underperformance from some of the portfolios and underlying holdings. Digging deeper, in most cases, the underperformance is the result of their quality focus and in some cases, higher than average cash balances. As the markets experience short term periods of volatility, look for the managers to move in to deploy some of this cash, picking up what they believe to be attractive companies at more compelling valuation levels. In the interim, I continue to monitor both the portfolios and the underlying holdings closely.