I am an accredited or eligible investor as defined in National Instrument 45-106.




Liis Palmer, Cassels Investment Management Inc.

Global Balanced Fund

Last week the MSCI World Index was down 8.5 percent. The TSX was down 7.2 percent. The C$ was down 4.7 percent against the US$. The price drop in oil and the spike in volatility caused investors to shift away from stocks and bonds. The Marquest Global Balanced Fund A units closed at $16.48 compared with $16.73 the previous week.

Significant contributors to performance were JetBlue (up 3.6 percent), General Electric (up 1.7 percent) and CVS Health (up 1.9 percent). JetBlue is the low cost airline providing coach class service primarily out of New York’s JFK Airport and within the US. JetBlue’s stock price is recovering from weakness in December when management expressed expectations of short term weakness in passenger revenues. Its valuation is a reasonable 12 times earnings. Persistent low fuel prices and cost control will be positives for the company. GE is expected to have double digit earnings growth for the next few years and that growth is visible. Investors pay up for visible growth in this environment.

Laggards were our MEG Energy bond (down 9.0 percent), Keyera (down 6.7 percent) and Walt Disney (down 6.0 percent). MEG’s bond price came down with the drop in WTI (down 20.6 percent to $29.42/barrel). All coupon payments have been made. Keyera, one of the few stocks in the oil patch to deliver a positive return (almost 3 percent) in 2015, was also hit last week. Disney’s stock price fell. Barclay’s took their price target down based on expectations of continuing weakness in ESPN. Disney is a large part of the Dow and the S&P and would have been hurt by indiscriminate index fund selling.

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