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Winter 2019: MD Funds and Portfolios continue to produce strong results

Major equity markets posted their fourth consecutive quarterly gain to end the year at or near all time highs. Give the exceptional market returns, it’s no surprise that MD Funds and Portfolios produced strong results.

2019 has come to an end and it will go down in history as one of the best years for investors. The majority of central banks cut rates or turn dovish in policy. This action was beneficial to both equity and bond investments. However, headlines of impending recession popped up, which typically coincide with bear markets. With the S&P 500 index at all-time highs, there were also concerns about lofty valuations. Regardless, it was a great year for MD Investors. In fixed income, The FTSE Canada Universe Bond Index returned six-point nine percent over the year, while the FTSE Canada Long Term Bond Index returned twelve-point seven percent. These impressive results are a strong reminder of the important role bonds play in a portfolio. Major equity markets posted their fourth consecutive quarterly gain to end the year at or near all-time highs. Given the exceptional returns in 2019, it is no surprise that the MD Funds produced strong results. The MD Fund family continues to rank very high compared to peers. Recent successes are evident in our U.S. funds and pools with continued strength from the MD American Growth Fund. Not only does the fund boast a first quartile result over the past three years, it is one of the few funds that has outperformed the S&P 500 index over the past 1, 3 and 5 year periods. Stock selection in the consumer discretionary and information technology sectors, where the most significant contributors, with companies like Lululemon, Amazon and Nike performing very well, along with MasterCard, Microsoft and Salesforce.com. Another success has been MD Growth, which has achieved a top quartile result over the past three years, with a 21 percent return last year and a 10-year compound return of over 10 percent, MD Growth has returned to its former glory. We didn't buy Japanese banks and autos, which lagged woefully. However, we did own cutting edge Japanese technology companies and industrials such as kids. It could be a good diversification opportunity for those looking for growth potential after many years of strength from the U.S. equity market. Just to be clear, I'm not suggesting our investor cycle out of the U.S. equities. In fact, we increased our allocation to U.S. equities in our portfolios earlier this year, both strategically and tactically. This is one of the many decisions that has led to recent strength in our Global Tactical Opportunities Pool. We use a similar approach in the MD Precision Portfolios to adjust to shifting global macro environments and the resulting market impact. This is important, as we've seen many strong years in the equity markets, and we may be entering the next phase in the cycle. The net result is that MD Portfolios delivered very strong results in 2019. I would be remiss to end without reminding investors that 2020 is unlikely to be a repeat of 2019. We remain optimistic about the opportunities we have to invest in. In 2020, we expect returns to be more in line with realistic long-term assumptions.