February 28, 2023 | portfolio managers' brief

Portfolio Managers’ Brief: February 2023

BY: Jason Ayres
A brief review of market conditions and how they are impacting the management decisions of our Investment Review Committee (IRC).



2022 Portfolio Performance Review:

  • The year saw challenging market returns across equities, bonds, and other fixed-income products.
  • Despite hopes for a year-end rally due to a strong November, December was underwhelming due to the Central Bankers’ focus on battling inflation.

Performance Metrics:

  • 2022 Closing Stats: TSX Composite (-8.60%), S&P 500 (-19.50%), Nasdaq (-33%).
  • 2023 Uptick: As of February 2nd, TSX (7.30%), S&P 500 (8.75%), NASDAQ (16.75%).
  • Core Canadian Universe Bond Index ETF (XBB) was down 11.80% in 2022 but has rebounded by 4.00% in 2023.

January Effect:

  • Some credit the strong start of 2023 to the ‘January Effect’ – a suggested uptrend in stock prices in January.
  • Historical data indicates this effect is roughly as predictable as a coin flip.

Factors Influencing the January Surge:

  • Factors possibly influencing the rise include tax loss selling in December, the opportunity to buy the dip in January, and positive news headlines.
  • The pullback of December’s Consumer Price Index (CPI) numbers, both in the U.S. and Canada, signals positive impact from Fed policies on inflation.

Banker Perspectives:

  • Bank of Canada’s recent modest rate cut was coupled with a hint towards pausing to evaluate the inflation situation.
  • U.S. Central Bankers also opted for a minor rate reduction. They hinted at future tools to combat inflation if required, which buoyed market sentiment.

Portfolio Strategy:

  • Our portfolios are positioned to participate in the rally, but caution prevails as far as betting on an immediate policy change from the Central Banks.
  • Uncertainties persist, and the market will likely react swiftly to emerging headlines.

Investment Approach:

  • Emphasis on holding cash in high-yielding money market funds for value without market risk.
  • Positive outlook on bonds and other fixed-income products for 2023.
  • Continuous active management of equities, focusing on established companies, and leveraging market volatility.


  • While 2023 has had a strong start, a sideways trend in the first half is possible, dependent on global economic data and its influence on central bank policy.
  • The crucial advice remains: Stay patient, invested, and agile in response to market-moving headlines.

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