Quarterly Markets Update: Q4 2023

February 6, 2024

Key Takeaways:

  • 2023 Performance and 2024 Outlook: The Matco fund platform yielded positive results in 2023, with the Global Equity Fund leading at 15.4%. For 2024, we anticipate a 65% probability of a turbulent economic landing, guiding a strategic preference towards fixed income due to perceived economic downturn risks while maintaining a balanced view of equities.
  • Investment Strategy Adjustments: In response to economic forecasts, the Matco Asset Mix Committee increased Matco Balanced Fund’s fixed income allocation to 50%. Our strategy is complemented by our favourable view of Canadian equities due to attractive valuations and high dividend yields, signifying a strategic tilt to navigate potential market volatilities.
  • Sector and Market Insights: The Canadian market is highlighted for its low valuation and high dividend yield, presenting opportunities in financials, pipelines, telecommunications, and utilities sectors. Small-cap stocks are noted for their value proposition, especially if interest rates fall. The energy sector is recognized for its potential despite current undervaluation, indicating a strategic focus on sectors with growth potential amidst economic shifts.
  • Fixed Income Emphasis: With a standout performance in 2023 and a strategic positioning for 2024, we underscore fixed income’s attractiveness due to favourable income generation, portfolio protection, and comparative value against equities. We emphasize extending bond duration and cautious corporate bond selection, aiming to leverage rate cuts and economic deceleration for investor benefit.
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