Each of the portfolios posted strong gains in April, led by the all equity Growth Portfolio, which gained 3.7%, outpacing its benchmark. Our Balanced Portfolio gained 2.2%, and our fixed income focused Conservative Portfolio rose by a more modest 1.1%, each lagging its benchmark.
For a detailed review of the portfolios’ performance and risk reward metrics, you can download our standard monthly portfolio report here. For those looking for more detail, I am also providing additional reports generated from Morningstar which show more detail regarding the portfolios. A summary report can be downloaded here, while the more detailed report can be downloaded here.
I almost feel like a broken record in that while I am very happy with the absolute return numbers being generated by the portfolios, I continue to be frustrated by their underperformance. Even more frustrating is I still believe in each of the funds in the portfolios.
The Dynamic Advantage Bond Fund is one that has been a frequent laggard. The managers continue to keep duration well below the index, which makes it very defensive, which creates a headwind in a flat or falling yield environment. However, when we see yields start to creep higher, or we see periods of higher than normal volatility in the bond market, this Fund would be expected to shine. However, I have begun to explore other options that have a more active duration management policy, which would be expected to provide similar downside protection, but participate a bit more in the upside.
On the equity side, the Mackenzie Ivy Foreign Equity Fund, and Fidelity Canadian Large Cap Fund are both concentrated, value tilted portfolios that have lagged in the recent environment that has rewarded higher beta names. Both are very well managed, and have managers that have remained true to their style and process. I believe that in time, the market will revert to a more normalized environment that will see these funds deliver above average risk adjusted returns. Further, in periods of market volatility, I would be very comfortable owning both Funds, as they have historically done a stellar job in protecting capital.
As frustrated as I am, it is not with the absolute level of return, nor the volatility of the portfolios. Rather, I am frustrated by their performance compared to their benchmarks. I am confident that in time, the relative numbers will improve, and in the interim, we need to remain patient.