Insurance, Investments and Group Benefits

This past week has been marked by significant developments in the United States, highlighted by President Donald Trump's conclusive electoral triumph, along with a policy adjustment from the Federal Reserve, which elected to reduce the overnight interest rates by 25 basis points. In response to these pivotal events, the Empire Life Investments Inc. team provides some explanation of the prospective implications on financial markets, with a particular focus on the U.S. market. The informed perspectives of Ashley Misquitta, Investment Strategist and Senior Portfolio Manager and Ian Fung, Senior Portfolio Manager have been collated and are presented here for a fuller understanding of the anticipated market dynamics.

Paul Holba, Senior Vice-President and CIO of Empire Life Investments Inc. discusses some of the key themes the investment team will monitor as we head into the second half of 2024.

Key takeaways:  

• Exposure to international equities was increased by 0.25%-1.5%
• Exposure to US equities was decreased by 0.25%-1.5%
• Our exposures to the other asset classes were rebalanced back to target
  

From regional bank failures to unresolved geopolitical tensions to explosive growth in artificial intelligence. We have seen it all in 2023, and there are still many questions investors face as we head into the new year. 

Paul Holba, SVP and CIO, Empire Life Investments Inc. breaks down some of the key themes that we expect will impact the markets in the coming year, such as potential rate cuts, unresolved geopolitical tensions and considerations when it comes to big tech and AI.  

Market Implications of the Conflict in the Middle East

Tensions in the Middle East have escalated following the attack on Israel on October 7th by Hamas militants from the neighbouring Gaza Strip. The incursion sparked international backlash, and Israel announced a complete siege of Gaza on October 9th. This conflict has led to a considerable death toll on both sides, a hostage crisis involving over 200 Israeli and international citizens and a growing humanitarian crisis in Gaza. 

Recently, we sat down with SVP and CIO, Paul Holba to get his thoughts on the events that have impacted markets year to date, and where the investment team sees opportunity going forward. In this video, Paul shares:

• How almost 73% S&P500’s returns were attributed to the performance of a handful of companies known as the “Magnificent Seven Stocks”.
• The impacts of the aggressive interest rate hikes by Central banks, what investors can expect and how it could affect their portfolios.
• How staying true to an active management strategy may be instrumental in preserving wealth during a global economic slowdown.

In early June, the S&P 500 rose by more than 20% from its October low, reaching its highest level since April of last year. Often observed as a barometer for the overall health of the U.S. economy, the index’s strong performance generated some optimism with respect to the trajectory of the U.S. economy. However, when considering the market breadth, which refers to the number of stocks that are moving the index, a less optimistic picture emerges.

In a recent video, Paul Holba, CIO, reviews the key market events of 2022 and outlook for 2023. He also shares how the team’s investment strategies reflect our cautious view of the environment, but with some positive outlooks and opportunities.

Key takeaways:  

• Tactically moving to a more defensive positioning
• Increased bonds, decreased equities (all portfolios except Emblem Aggressive Growth, which has no bond component)
• Emblem Aggressive Growth – increased US equities, decreased international equities
  
  

Tactical update - December 20, 2022

We are choosing to adopt a more cautious posture and see increasingly attractive relative value in fixed income. As such, we have reduced our equity targets in the various Emblem funds and increased our fixed income targets.

From the desk of CIO Paul Holba: In this latest update from the Empire Life Investments team, Paul Holba discusses how 2022 continues to be a challenging year—but it’s not all bad news.

Market recap

2022 continues to be a challenging year for investors. As mentioned in my July update, the first half of the year produced some of the worst year-to-date returns in decades for many markets. At the end of the third quarter, market returns continued to incrementally trend in the wrong direction (albeit at a slower clip). However, many markets experienced a strong October rally, trimming the year’s losses to varying degrees. Supported by its resource sector orientation, Canadian equities held their value better over other markets, while the growth-oriented Nasdaq Composite continued to lag materially.