The portfolio management team remains constructive on the outlook for Canadian equities. Equity valuations look fair on an absolute basis but are compelling relative to the current level of interest rates. We continue to deploy our investment philosophy via a consistent investment process pursuing high quality companies and ensuring we are being rewarded for the risks being taken.
Our investment philosophy and process are primarily a bottom up strategy which focuses on investing in high quality companies which trade at a significant discount to fair value.
Our investment philosophy and process is primarily a bottom up strategy which focuses on investing in high quality companies which trade at a significant discount to fair value. However, we also incorporate economic and business cycle analysis into our process as a secondary consideration which at times allows for changes to sector positioning.
The portfolio management team remains optimistic on the outlook for Canadian equity markets. The Canadian economy is expected to be the beneficiary of strong global economic growth driven primarily by the United States. This backdrop is expected to result in decent earnings growth for the overall market which should be positive for equity market returns. We believe earnings growth and a re-rating will drive Canadian equity market returns in the coming period as valuations are increasingly attractive with the market trading below historical average valuation levels and a significant discount to U.S. benchmarks.