April 2023 - Monthly Update

“Volatility returned with a vengeance in March as the emergence of banking crisis fears dominated price action in the market, as investors contemplated the potential impact on the broader financial system and the Fed’s policy path going forward. Despite the concerns, the S&P 500 still managed to post a… gain during the month with mega-cap growth stocks exhibiting some of the strongest returns, helping to buoy the overall market. From our perspective, these banking developments do not alter our 2023 outlook… and, in fact, make our call for price choppiness and heightened volatility throughout the year even more probable. As such, we believe investors should be stock-pickers in this environment and use periods of weakness as opportunities to add to select positions. In addition, while growth has clearly been the style preference as of late, we would not recommend piling into these hyper-growth names at this time as we continue to favor a tilt toward value amid this market backdrop. The S&P/TSX declined … in March, underperforming the S&P 500… The bulk of the underperformance was driven by Financials, the largest weight in the TSX... From our perspective this is a compositional issue, as US Financials declined … in March. As such, we believe this will likely reverse as these concerns subside... Overall, despite the recent Financial-driven weakness we continue to believe the TSX remains well positioned to outperform in the near term. Indeed, the strong relative value and cash flow position of the TSX remains a clear source of downside protection in 2023.”