Fund FTQ and Fondaction under pressure

This does not bode well for the half-year performance of the two major employee-sponsored funds, the FTQ’s Solidarity Fund and the CSN’s Fondaction.

The probability that the price of their respective shares will be corrected downwards as of May 31st is very high.

The reason is quite simple. In the six-month period from December 1 to May 31, the financial markets recorded declines in both the stock market and the market for tradable bonds.

  • Listen to Michel Girard Radio’s economic chronicle:

When I look at the Quebec values ​​side, the pullbacks seem pretty severe. examples ?

The IQ-30 index, which consists of the 30 largest Quebec-headquartered companies listed on the Toronto Stock Exchange, fell 5.7% over the past six months.

Even worse. Its “little” brother, the IQ-120 Index (consisting of 120 Toronto-listed Quebec companies) fell about 10.4% over the six months.

Another indicator to use as a reference to try and predict the performance of our two labor sponsored funds: the QXM Fund (CI Morningstar Ntn’l Bk Quebec). The all-Quebec equities QXM is down 12% since early December last year.

Looking now at the performance of the major stock market indices over the past six months, given the returns (in Canadian dollars, including dividends) compiled by Consulting Actuary Guy Aubin as of May 31st, we see large declines.

  • S&P 500: -13.0%
  • MSCI World: -12.8%
  • MSCI Emerging Markets: -11.4%
  • MSCI Europe: -7.5%

One exception: Canada’s main stock market index, the S&P/TSX, managed the feat of posting a positive return of 1.7%.

You’re going to say to me, why be pessimistic about our work sponsored funds when the Canadian stock market barometer is in positive territory?

That’s because Canada’s index, which tracks the performance of small Canadian companies (including Quebec), the Toronto Stock Exchange’s S&P/TSX Growth Index, is down 25% over the past six months.

VERY PRESENT IN SMES

However, you should know that our two large unemployment insurance funds are present in many small and medium-sized companies.

Fonds de solidarité de la FTQ and Fondaction hold significant assets in fixed income securities, such as bonds, in their respective portfolios. B. Bonds.

Based on the half-year bond index returns just reported by actuary Aubin, there is reason to be quite bearish on that side as well.

Proof:

FTSE Canada

  • Universal Bonds: -8.8%

FTSE Canada

  • Long-term bonds: -15.6%

FTSE Canada

  • Real yield bonds: -11.2%

RETIRED ?

The shareholders of the fund FTQ and Fondaction, who want to get their balls out soon after their retirement, theoretically have an interest in taking action before the upcoming share price revision is announced on May 31st.

Note that there is never a surprise with worker sponsored funds due to the high proportion of private securities and specialized funds in their portfolios.

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