December 2017 Commentary

2017 ended up being another strong year for equity markets. The S&P 500 and Dow Jones indices achieved record levels, up a respective 21.8% and 28.1% for the year including dividends. It was a year characterized by ultra-low volatility, three Fed rate hikes, low inflation and unemployment levels, US tax cuts, and cryptocurrency and cannabis mania. Most alternative asset managers materially underperformed the major US and Canadian indices (as at November 2017, the Scotiabank Canadian Hedge Fund Index was up 4.01% YTD). While our two long/short funds also fell under this category of underperformance, we can’t help but question whether this equity bull market, now almost 9 years long, can continue indefinitely. In our view, the case for diversifying your 100% long only equity portfolio has never been stronger.

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