Equity Pool Quarterly Review
For the period ending
December 31, 2009
After a dismal 2008, the markets recovered strongly in 2009 resulting in the Fund’s return of 26.9% for the year. Equity market returns were particularly attractive after significant rallies from their lows in early March.
In the quarter, the Fund was up 3.1%, slightly behind the benchmark return of 3.3%.
For both the quarter and 12 month periods ending December 31, 2009, positive security selection in foreign equities benefited returns while Canadian equities trailed their benchmark, resulting in underperformance of the Fund relative to its benchmark.
ASSET MIX STRATEGY
With the global economic recovery still facing many challenges, equity markets are already pricing in much of the anticipated growth for 2010. Nevertheless, we believe that Canadian equities can continue to perform well if this cyclical recovery persists. Commodities will continue to benefit from the strength of emerging markets which now account for more than half of world growth. Consequently, we continue to favour Canadian versus foreign stocks.
Many uncertainties remain concerning the outlook for 2010 and 2011. The current economic recovery is still very fragile and a meaningful risk of a secondary downturn remains. Governments face major challenges in the future dealing with today’s financial excesses and consumers and corporations are still exercising caution.
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