Our funds at a glance

Each quarter, Bâtirente’s Investment Strategy Manager, Jean-François Dumais*, shares our funds’ performance results with you and offers his comments regarding financial markets. This issue looks at the third quarter of 2023.

Economic performance
Central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union. The primary role of central banks is usually to maintain price stability. Many central banks also have supervisory or regulatory powers to ensure the stability of commercial banks in their jurisdiction, to prevent bank runs, and in some cases also to enforce policies on financial consumer protection. Central banks in most developed nations are institutionally independent from political interference.
Source: Wikipedia interest rate hikes have had an impact on global inflation growth, which is far below the peak reached in the summer of 2022. In Canada, this rate dropped from a high of 8.1% in June 2022 to 3.8% by September 30, 2023.

We’re approaching the end of this money tightening measure (i.e., increased central bank rates). Market players are not expecting any further increases in Canada, while predicting just one for the United States.

However, there is still some uncertainty about where these rates are headed due to inflation, which still hovers well above the 2% target of North American central banks. What’s more, the third quarter saw resource prices climb (e.g., a surge of nearly 30% in price per barrel of oil), which could drive inflation upward.

These rates could therefore stabilize at higher levels for a prolonged period. The rate drops projected until recently for the second half of 2023 have now been pushed back to the second half of 2024.

Lastly, the more difficult monetary conditions will likely unleash a recession by the end of the first quarter of 2024. We’ve already noticed a slowdown in Canada’s economic growth. Within one year, gross domestic product (GDP) fell from 4.6%, in the summer of 2022, to its current 1.1%.

Nonetheless, the recession should be limited on either side of the border primarily due to the labour shortage.

Market performance
Expectations of high interest rates over a prolonged period led to pessimism in financial markets.

The all-country equity index recorded a return of -1.3% (in Canadian dollars) in the third quarter, while Canada’s main index (S&P/TSX) posted a performance of -2.2%.

The FTSE Canada Universe Bond Index had a -3.9% return.

On a final note, public infrastructure and real estate indices also suffered negative impacts. This is evident from the -6.1% performance (in Canadian dollars) for infrastructure and -3.8% (in Canadian dollars) for real estate.

What’s important to keep in mind at this time is that whatever your investment portfolio, this was a tough quarter for everyone. Furthermore, in periods of volatility, the key is to stay the course and look to the long term to ensure the success of a project as important as your retirement.

How did Equity Multi Funds perform in Q3?
Bâtirente’s Canadian Equity Multi Fund was down 1.4% but still surpassed its benchmark of 0.8%. The fund’s outperformance can be attributed to the right selection of securities. Fund performance for 2023 was 4.7%.

Bâtirente’s Global Equity Multi Fund had a total return of -2.6%. Nonetheless, it has remained in positive territory since the start of the year, with a performance of 5.5% for 2023.

The same applies to Bâtirente’s Global Small Cap Equity Multi Fund, which ended the quarter at -2.9%, yet has remained positive for the year, at 5.2%.

What about fixed income Multi Funds?
These funds achieved negative returns but still added value for the quarter.

In fact, Bâtirente’s Treasury Multi Fund performance was 0.1% higher than its benchmark return (-0.3% compared to -0.4%). Moreover, Bâtirente’s Bond Multi Fund beat its benchmark by 0.3% (-2.3% compared to -2.6%). Once again, we saw the positive performance of these funds in relation to their benchmarks, mainly due to the shorter term involved for bonds, which is profitable in an inflationary context.

What were the repercussions for Bâtirente Diversified Funds?
In Q3, Bâtirente Diversified Funds posted returns ranging between -2.5% and -1.5% depending on their risk profile, i.e., from most risky (more equities) to least risky (more bonds). For 2023, total performance has been between 1.6% (Income) and 3.8% (Energetic).

What’s important to remember?
Whatever your investment portfolio, this was indeed a difficult quarter. However, at Bâtirente, we know that in periods of economic volatility, one should stay the course and look to the long term. And that holds even more true when we think about retirement or other future plans! That’s because, for the past 10 years, Diversified Funds have generated annualized yields varying between 3.6% and 7.7%—well above the Canadian inflation rate (2.6% annualized) recorded for that same period.

To learn more about Bâtirente Funds and get updated performance information, see the Bâtirente Funds of our website.

*Jean-François Dumais has worked as an Investment Strategy Manager at Bâtirente since 2019. He holds a Master of Business Administration (MBA) in finance. He has nearly 20 years’ experience in financial markets.