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COVID-19 & Your Finances News

Market Update: Halfway Through 2020, What Comes Next?

July 16, 2020

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Market Update: Halfway Through 2020, What Comes Next?

COVID-19 & Your Finances News

We’re officially half way through 2020, a year that has been marked by tremendous uncertainty (to say the least) as our society and the global economy transforms in response to the global pandemic.

From a stock market perspective, we’ve witnessed a show-stopping drop, followed by the US S&P 500’s quickest bull market in the history. At this point, some global equity markets have rebounded to almost unchanged for the year, with the US Nasdaq Composite Index hitting new consecutive weekly record highs in July so far.

So where do we go from here?

Cautiously optimistic for the second half 

From our perspective, the current market outlook is mixed.

We’re optimistic because:

As we’ve said before, this recession is different. Global governments and central banks learned form the Great Financial Crisis of 2008, and took more aggressive measures to mitigate the economic fallout from the pandemic. It appears that these monetary and fiscal stimulus have certainly helped support equity markets. 

We’re also seeing a recent increased appetite for risk among investors, with FAANG stocks surging (an acronym for Facebook, Apple, Amazon, Netflix, and Google), and a wave of speculative activity driven by first-time investors and day traders on various do-it-yourself online investment platforms and mobile apps.

We’re cautious because:

Despite the extraordinary market rebound, there are several areas of concern in the global economy:

It could take some time before economic activity and job growth catches up with the valuations and rise we’ve seen in the markets.

With so much still in flux, we expect that the rebound could take a pause in the next few months, particularly given that stock market activity tends to slow down in the summer.

If investor expectations disappoint and the economy and employment do not make significant improvements in the second half of the year, market volatility could come back into play.

Performance*

Here’s how market trends affected CI Direct Investing portfolios in June:

ETF Portfolios

June performance1-Year performance
ETF Safety Portfolio+1.25%+2.87%
ETF Conservative Portfolio+1.30%+3.35%
ETF Balanced Portfolio+1.72%+3.38%
ETF Growth Portfolio+1.66%+3.55%
ETF Aggressive Portfolio+1.52%+3.05%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.

Private Investment Portfolios

June performance1-Year performance
Safety Private Portfolio+0.69%+3.29%
Balanced Private Portfolio+0.64%+3.39%
Aggressive Private Portfolio+0.15%+0.69%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.


*This is a hypothetical illustration of our portfolio performance as of the date noted above. The time-weighted performance is displayed in Canadian dollars and assumes daily rebalancing (unless otherwise stated) and the reinvestment of distributions. Private Investment Portfolios assumes monthly rebalance. It is reflective of the model portfolio’s target holdings and weights including portfolio changes. The performance is net of the management expense ratios (MERs); however, does not include CI Direct Investing’s management fee or taxes. Performance is annualized for all periods greater than one year.  This performance may differ from clients’ actual account return due to the timing of deposits, withdrawals, buys and sells, and the reinvestment of distributions. 
The performance provided is for informational purposes only and is not to be considered as investment advice. Portfolio performance is not guaranteed. The value of your investment can go down, up and change frequently. Past performance is not indicative of future returns. There may be significant differences between the investment portfolios that are not discussed here, including different investment objectives and risk factors. You should always consider, in any investment decision, your investment objectives, needs, circumstances, restrictions, tolerance for risk, financial goals and investment time frame.
Although CI Direct Investing believes the obtained information provided from third-party sources to be reliable, CI Direct Investing does not guarantee the information and disclaims any liability associated with the use of these performance results. Source: Morningstar Direct. For full details of calculation please contact: [email protected].

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