MD Financial Management: Chief Investment Officer Message—Stock Markets Resilient In Face Of Geopolitical Risk

April 14, 2014

MD’S MARKET UPDATE: Most markets positive at month-end

After starting the month lower as a result of the situation in Ukraine, most stock markets were able to return to positive territory by month-end. Both the TSX and S&P500 were up on the month, while the MSCI EAFE finished the month in negative territory. The MSCI Emerging Market Index rebounded significantly and outperformed its developed counterparts, advancing 2.8% in March .

The Canadian dollar ended the month stronger, but remains down significantly year over year relative to both the U.S. dollar and euro.

The FTSE TMX Universe Bond Index was down 0.2% as bond performance continued to trail equities. The 10-year Government of Canada bond yield was up 2 basis points (bps) to 2.47%.

RESULTS ACROSS GLOBAL ECONOMIES: Moderate growth, low inflation continue globally

In March, the U.S. central bank’s bond-buying program was reduced by an additional $10B per month, following on the reduction of $10B announced at the end of January. The continued reduction or “tapering” of stimulus by the U.S. central bank (the “Fed”) reflects an improving outlook for the U.S. economy, although the level of employment continues to be weak.

In the European Union, economic sentiment improved to its highest level since July 2011, with all core EU members posting improvements.

In emerging markets, manufacturing growth continues to slow, with China still expected to grow at a 7%+ pace in 2014.

Across the globe, inflationary pressures remain muted with the headline annual rate in Canada, the U.S. and the UK below 2% central bank targets.

(in Canadian dollar terms, unless otherwise indicated)

Market Indicator 1-Month Return (%) 1-Year Return (%)
Canada (S&P TSX Composite Index) +1.2 +16.0
U.S. (S&P 500 Index) +0.5 +32.4
Europe, Australasia and Far East (MSCI EAFE Index) -0.9 +28.3
Emerging Markets (MSCI EM Index) +2.8 +7.5
Canadian Bonds (FTSE TMX Canada Universe Bond Index) -0.2 +0.8
Exchange Rate: Canadian Dollar to U.S. Dollar +0.1 -7.9
Gold Price (oz) -3.2 -19.7
Oil Price (WTI) -1.0 +4.5

Sources: StateStreet via StyleADVISOR, PC Bond Analytics, and Bloomberg.


Our investment methodology incorporates continuous oversight to ensure that the combination of underlying funds, and their highly-qualified external investment managers, position portfolios for success—while also managing risk.

In order to protect the value of our proprietary investment management process, which is engineered exclusively for Canadian physicians, MD has recently filed patent applications in both Canada and the United States. (More information on MD’s patent application process is also available in an article, published at the end of March, in the Financial Post.)

If you have questions about the impacts of global economic trends on your investment portfolio, or MD's investment methodology, I invite you to connect with your personal MD Advisor who would be pleased to review with you.

William R. Horton, Jr., CFA
Chief Investment Officer
MD Financial Management Inc.

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