The August Pension Newsletter includes:
2022 Q2 Investment Commentary
ELCIC Pension Plan
| ELCIC Pension Plan Investment Return
Jan 1 to Jun 30, 2022 |
Median Balanced Pension Plan as a comparison
Jan 1 to Jun 30, 2022 |
Excess return |
| -14.6 | -12.6 | -2.0 |
The returns in both equity and bond portfolios have been disappointing so far this year. With the current economic and political crisis, rising interest rates and high inflation we experience an unusual combination where the bond performance suffers from higher interest rates and the equity performance from reduced growth prospects. But there is a good chance of improvement going forward as our investment advisor at PH&N had to say:
“It’s certainly been a challenging start to 2022 in financial markets, with both bonds and equities posting negative performance. Generally, in risk off periods, bonds will perform ok given their safety characteristics. However, this time around with the inflationary backdrop where it is, central banks have been raising the overnight level of interest rates quite aggressively to combat inflation; their actions are entirely necessary. The result of these actions has been weak return for bonds so far this year. Equity markets have been falling on slowing growth concerns, negative economic shocks, and the likelihood of a recession in the not too distant future. There will be relief when inflation eventually rolls over, central banks achieve their hiking objectives (end of 2022), and corporate earnings become more clear and resume growth. The positive news is that bonds are now yielding the highest level of interest since before the Financial crisis of 2008/2009 which provides an attractive level of income. Lastly, we expect volatility in equity markets to lessen in the second half of 2022 and are constructive that most of the adjustment and selloff has been endured.”
Growth Fund
Fixed Income
*Please note that information is not intended to be investment advice or to be a recommendation for your personal investment portfolio.
Have a question for GSI?