What do our NBI experts think?
1. The economic recovery should ensue, but the pace of growth will slow.
Imbalances exacerbated by the pandemic should begin to unwind, paving the way for the gradual normalization of ultra-accommodative monetary policies and a gradual phase out of emergency fiscal support by many developed countries.
2. Waves of COVID-19 cases likely to arise at different times in different countries.
Hospitalizations and deaths should remain far from reaching a state of crisis thanks to the success of vaccination campaigns ramping up in developing countries. Will an improvement in global vaccine coverage allow us to declare victory over the pandemic? Only time will tell.
3. Annual inflation declines but remains volatile.
Several transitory factors exerting upward pressure on prices abate. Still a strong economy and structural factors keep inflation relatively high.
When compared to equities, the risk/reward outlook for bonds remains weak.
With rate hikes on the horizon in 2022, corporate and shorter term fixed income securities should outperform their peers.
As interest rates rise, equities tend to outperform bonds on average.
In this enviornment, Canadian and U.S. equities should outperform EAFE and emerging market (EM) equities in 2022.
A good balance between defensive/growth (S&P 500) and cyclical/value (S&P/TSX) stocks could improve overall diversification.
Tighter monetary policy, slowing global growth and a stronger U.S. dollar can negatively impact EM while structural factors could cause EAFE equities to underperform.
Commodities and currencies
Gold prices likely to underperform if real yields rise. However, they remain an inexpensive insurance against inflation surprises.
The U.S. dollar is still attractive due to its safe haven status. In comparison, the loonie is hovering next to its intrinsic value and does not signal any major opportunities.
Looking back at 2021
If the last 2 years have taught us anything, it’s that we should never take anything for granted during a pandemic. Emerging variants, fluctuating case counts and uncertainty regarding major central banks' narratives toward inflationary pressures could all create more volatility in the new year. That being said, it is important for investors to remain focused on the end goal and not react to short term aberrations.
NBI solutions seek to provide superior risk adjusted investment returns over the long term, regardless of market conditions. Here are some of the year’s top performing strategies from the NBI lineup:
|F series returns as at December 8, 2021||YTD||1-year||3-years||5-years||10-years||Since inception||Inception Date|
|NBI U.S. Equity Private Portfolio*||31,34%||35,45%||26,28%||22,31%||-||19,51%||2015-05-21|
|NBI U.S. High Conviction Equity Private Portfolio*||26,56%||28,60%||22,41%||20,16%||-||17,91%||2015-05-21|
|NBI U.S. Equity Fund||26,15%||28,23%||21,64%||19,68%||-||18,86%||2013-12-24|
|NBI Active Canadian Preferred Shares ETF||24,92%||28,96%||-||-||-||12,50%||2019-01-15|
|NBI Canadian High Conviction Equity Private Portfolio*||24,75%||26,67%||11,58%||8,23%||-||6,67%||2015-05-21|
|NBI Canadian Family Business ETF||23,81%||27,32%||-||-||-||15,24%||2019-01-15|
|NBI Canadian Equity Private Portfolio*||23,78%||25,64%||12,55%||7,74%||-||6,00%||2015-05-21|
|NBI SmartData US Equity Fund||22,59%||24,45%||16,66%||14,44%||15,39%||11,29%||2008-05-16|
|NBI Global Equity Fund||19,83%||23,48%||19,62%||17,79%||-||15,76%||2013-12-24|
|NBI Sustainable Global Equity ETF||19,76%||25,77%||-||-||-||32,64%||2020-01-23|
|NBI International High Conviction Equity Private Portfolio*||11,37%||14,77%||17,95%||15,60%||-||11,57%||2015-05-21|
|NBI Floating Rate Income Fund||4,86%||6,15%||3,83%||3,31%||-||2,44%||2014-01-08|
|NBI Unconstrained Fixed Income Fund||-0,37%||0,54%||4,64%||1,95%||-||1,95%||2016-11-18|
|*Exclusive to NBF advisors only|