Mackenzie Minute: May 26, 2017
Rick Weed, Head of the Mackenzie Systematic Strategies Team, provides an overview of valuations and growth prospects in four major regions.
Rick Weed, Senior Vice President, Investment Management, Head of the Mackenzie Systematic Strategies Team
The equity market has done extremely well year to date. I’d like to break out the four major regions we look at. Canada was up about 2.4% in the first quarter. It’s been flat since then. It’s actually been a little disappointment, compared to the other markets. The US equity market was up over 6% in the first quarter – that’s more of a continuation of what we call the “Trump bump” from the election; however, the US market has been flat since then. Europe and Asia are another story. Europe was up over 6% in the first quarter and it’s continued to rally up another 4.5% since then and Asia was up almost 4% in the first quarter and it’s continued to rally with another 3% rally since then. So we are very constructive on Europe and Asia currently.
We’ve noticed in the United States that the economic backdrop has actually been very good for the US; however, the valuations are becoming a bit stretched, but we also have to temper these thoughts with the fact that the political landscape is extremely challenging. There’s been a lack of political and economic leadership in the US, so we feel there may be some legislative gridlock coming forward.
We feel here at Mackenzie, in the Systematic Strategies Team, that we have a rather unique way of managing money. We rely on a global stock selection model to pick stocks for our portfolio and it will actually create country overweights and underweights. Our global stock selection models are seeing much better valuations and growth prospects in Europe and Asia. As a result, we have overweighted Europe and Asia and we’ve pulled a little back in the United States and Canada.