Decision by Committee (December 12, 2024)

This commentary is authored by the Guardian Capital LP Asset Mix Committee (AMC)1

The global economic backdrop has not changed materially since the AMC last met in early November. Growth momentum has remained generally positive with the US continuing to be the leader, underpinned by still-strong consumer spending. Underlying inflationary pressures have continued to generally ebb, which is keeping central banks on track to continue easing policy.

While the imminent change in the US government brings ample uncertainty, the expectations of a more pro-business US Administration are giving a lift to US markets and driving a bigger wedge between performance there and elsewhere — that said, Canada has performed relatively well in recent weeks, even with as the threat of impending tariffs looms large.

Market valuations outside of the US are at extreme lows on a relative basis (as well as an absolute basis in many cases) which suggests there is ample scope for improvement against the overwhelming pessimism should positive developments begin to materialize.

In the US, overall elevated market valuations amid heightened uncertainty over the outlook suggest some complacency, however, it remains the case that outside of the small group of mega-cap market leaders, valuations still appear generally reasonable. There is, however, plenty of optimism priced into the American market that may well turn in the future should earnings prove softer than anticipated. Still, there is no reason to anticipate that the momentum will not be maintained in the near term.

The expectation of further downward pressure on short-term interest rates from central banks (though longer-term rates are expected to remain comparatively anchored), should result in further steepening of the yield curve. Credit spreads are tight by historical standards, but all-in yields continue to offer decent value and credit fundamentals remain solid, supporting the argument in favour of allocating to corporate bonds.

Overall, the AMC felt comfortable with its exposures to Equity and Fixed Income, and allocations within the asset classes. Accordingly, the decision was made to leave allocations unchanged.

The AMC’s allocations remain overweight Equity with a bias toward Global Quality Growth strategies (and close to neutral weight in Canadian Equity). Fixed Income allocations are skewed toward corporate credit with below benchmark duration.

The AMC will continue to monitor economic and market developments closely in the coming weeks and stands ready to tactically exploit opportunities that may present themselves.

 

Asset Mix Committee Summary Views2
Growth Asset Allocation

Fund Benchmark* New Target Allocation** Changes from pre-decision positioning**
Equity 70.0% 78.4% –
Canadian Equity 40.0% 39.8% –
Canadian Equity 14.0 –
Canadian Growth Equity 12.9 –
Canadian Focused Equity 9.7 –
Canadian Equity Income 3.2 –
Global Equity 30.0% 36.8% –
Global Dividend Growth 12.1 –
US All Cap Growth 10.7 –
Fundamental Global Equity 10.5 –
Emerging Markets Equity 2.5 –
US Equity Select 2.0 –
Japan Value Equity Index ETF 0.9 –
Fixed Income 25.0% 21.6% –
Investment Grade Corporate Bond 13.4 –
Canadian Bond 8.2 –
Cash 5.0% 0.0% –

*Benchmark= portfolio strategic asset allocation **Figures may not add up due to rounding

 

Conservative Asset Allocation

Fund Benchmark* New Target Allocation** Changes from pre-decision positioning**
Equity 30.0% 33.7% –
Canadian Equity 17.5% 17.5% –
Canadian Equity 6.1 –
Canadian Growth Equity 5.7 –
Canadian Focused Equity 4.3 –
Canadian Equity Income 1.4 –
Global Equity 12.5% 16.2% –
Global Dividend Growth 5.1 –
US All Cap Growth 4.5 –
Fundamental Global Equity 4.4 –
Emerging Markets Equity 1.0 –
US Equity Select 0.8 –
Japan Value Equity Index ETF 0.4 –
Fixed Income 65.0% 66.3% –
Investment Grade Corporate Bond 25.0 –
Canadian Bond 41.3 –
Cash 5.0% 0.0% –

*Benchmark= portfolio strategic asset allocation **Figures may not add up due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Guardian’s Asset Mix Committee (AMC) consists of investment professionals and asset class specialists and is charged with overseeing the development and management of multi-asset investment portfolios, specifically addressing asset mix composition/allocation and areas for advice or communication to such clients as it relates to the makeup of their
portfolio.
2 These Asset Allocations represent the Asset Mix Committee’s tactical views given their assessment of market conditions and performance expectations.

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Published: December 19, 2024