Barometer Readings

Despite recent geo-political activity overseas, our long-term sector models remain intact with developed market equities favoured over developing market equities and higher yielding corporate bonds and yield based equities favoured over sovereign fixed income. It is always strange how markets telegraph developments before reasons become obvious. Over the past few months, our sector work has pushed us toward virtually a max weight in energy (specifically oil), in both our equity and income mandates. While a quick contraction in risk appetite is having an impact in the last couple of days, it appears to be an effective allocation given what is happening in the gulf.




Across mandates, portfolios currently target multi-year secular growth themes where the supply/demand situation allows for pricing power vs. rising input costs. On top of our energy exposure, Canadian REIT's offer three attractive characteristics which include strong AFFO growth, a decreasing cost of capital and incremental demand for space from new tenants such as Target. Finally, we want to highlight our focus on technology which includes semi conductor and semi capital equipment, fibre optics, mobile data and IT services. Each of these areas are experiencing strong demand growth with good pricing power.



Cyclical Bull markets are characterized by steady advances, marked by short, sharp corrections so we could see further short term profit taking but liquidity and re-allocation should bring buyers into leading names on pullbacks.

Barometer Pool Holdings http://bit.ly/e2FRZ5