January 8th, 2021

Year End and Q4 2020 Strategy & Market Reviews

Each quarter, our Investment Management teams publish their key observations and portfolio updates across North American, Global and Fixed Income markets. This is a high-level summary of our views for the Year Ended and Fourth Quarter of 2020. You can download more detailed reports below.


A century ago, with no vaccine, the Spanish Flu killed an estimated 50 million people. Today, with 1.8 million dead from COVID-19, we have two vaccines approved and finally some light at the end of the tunnel. One can hope that history will repeat itself and usher in a new “Roaring Twenties.”

2020 was a rollercoaster. Global stocks, represented by the MSCI World Index, lost more than a third of their value early in the year, only to gain nearly 70% and reach a new peak in December.

Returns were dispersed by region and industry. Tech stocks drove the Nasdaq Composite Index up 43.6% for the year. The S&P 500 (+16.1%) and MSCI Emerging Markets Index (+15.8%) also saw big gains. Canada’s TSX Composite Index returned 5.6%, while the FTSE 100 Index in the United Kingdom (-14.3%) and CAC 40 in France (-7.1%) lost ground.

The economic declines and job losses of 2020 were the most severe since the 1930s. Yet, thanks largely to government stimulus, US disposable income actually increased, defaults in the banking system were minimal and economic activity recovered quickly.

We are now witnessing a classic inventory-restocking cycle as manufacturers respond to consumer demand, which is back to pre-COVID levels. Much of this demand is for durable goods like cars and housing-related items – spending decisions that are longer-term in nature, difficult to reverse and generally a sign of strong consumer confidence.

We predict a strong global economic recovery in 2021 with one important caveat: The vaccines must work as advertised. Effective vaccines combined with low interest rates, ongoing stimulus, and huge pent-up consumer demand should drive a rebound that becomes increasingly obvious as the year progresses.


We maintain a “barbell” strategy, blending companies that are more and less sensitive to economic growth. This allows us to play both offense and defense as events unfold.

We added four new positions in the final quarter of 2020:

Analog Devices, a circuit and semiconductor manufacturer, has exposure to the growth of industrial automation and autonomous and electric vehicles.

Intuit, a provider of business and financial software, stands to benefit as people and businesses increasingly turn to online tax filing and accounting.

Morneau Shepell, traditionally a pension consulting company, owns a hidden gem in the form of a fast-growing online employee wellness service.

Sherwin-Williams, the paint company founded in 1866, operates a growing network of 4,900 stores that generate very attractive returns.


We recently added a position in Schneider Electric, a global leader in electrical management and automation. The company is well positioned to help address one of the world’s biggest challenges. Over the next 40 years, energy consumption is expected to grow by 50%, yet there is a goal to cut carbon emissions by half to address global climate change.

We also added positions in Analog Devices, Intuit and Sherwin-Williams, as did the North American portfolio.

We believe the Canadian dollar is likely to appreciate over the next 6-12 months, and implemented a 30% hedge against the US dollar during the quarter.


With the overnight interest rate at 0.25%, many are wondering when the Bank of Canada will announce a rate increase. 

In order for that to happen, the Bank will look for a significant improvement in unemployment along with inflation stabilizing at around their 2% target rate. Taking these factors into account, we believe rates will remain unchanged in the near-term and could even be cut to 0% if the pandemic is not brought under control.

In this environment, we continue to cautiously seek opportunities with a focus on preserving capital and managing risk.