US Equity   |   Apr 12, 2021

US Private Wealth 1st Quarter Market Commentary

The impressive recovery that we saw in 2020 continued into 2021, with a significantly improved macroeconomic outlook resulting from an accelerating vaccine rollout and an unexpectedly generous fiscal program designed to support demand and fast track job creation.

Although we still have a long way to go until we achieve a full recovery, we think the pillars are in place for the recovery to continue throughout the remainder of the year.

Carolyn N. Dolan
Executive Vice President, Head of US Private Wealth
Joseph A. Abraham
Senior Vice President, Direct Client Investments
Josefa Palma
Vice President, Direct Client Investments

First Quarter 2021 Review

The reflationary trade that started in the fourth quarter of last year gained notable ground through the first quarter of 2021. The highly accommodative stance from major central banks has also been instrumental in supporting risk assets this year. We did, however, see more volatility in the first quarter as the tug of war continued between economic recovery optimism and the immediate challenges, and uncertainties, posed by the pandemic. This volatility was compounded by a pickup in retail trading activity. Later in the quarter, yields rose much more sharply and quickly than was initially expected, which also unnerved investors. We anticipate that volatility will be here for the remainder of the year. Given our constructive view on the global economy more broadly, we will use any periods of volatility to increase our exposure to equities.

US markets outperformed international markets handily this quarter as the US economy continues to rebound at a faster pace thanks in part to the massive spending out of Washington as well as an impressive vaccine rollout. The S&P 500, the Dow and the Russell 2000 all hit new all-time highs. And, unlike last year, this positive performance was not just concentrated in the “stay at home” stocks. All eleven sectors, and 80% of the names, in the S&P 500 ended higher on the quarter. International developed markets on the other hand lagged as Europe continues to be plagued with lockdown measures given its slower vaccine rollout, hurting their economic recovery.

After a very strong year last year, emerging markets also lagged this quarter as a result of resurgent virus outbreaks in Brazil and India, concern around rising rates and a stronger US dollar. Additionally, China, which makes up over 30% of the emerging markets index, is down slightly this year as its recovery has slowed after leading the way last year. Given our view that rates will continue to edge up this year and that emerging markets will continue to face headwinds as it relates to vaccine rollouts, we eliminated our overweight position to emerging markets. 

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Disclosures

Past performance is not necessarily indicative of future results. There is no guarantee that the strategy will achieve its investment objectives or comparable results. Inherent in any investment is the potential for loss.

Sources

All market data and indicators are sourced from Bloomberg, unless otherwise indicated.

General

This material is proprietary to Fiera Capital Inc (“Fiera Capital”). This document is intended for information purposes only and may not be relied upon in evaluating the merits of investing in any Fiera Capital investment vehicle or portfolio.

The information provided reflects Fiera Capital’s views as of the date of this presentation. Such views are subject to change at any point without notice. Some of the information provided herein is from third party sources and/or complied internally based on internal and/or external sources and are believed to be reliable at time of production but such information is not guaranteed for accuracy or completeness and was not independently verified. Fiera Capital is not responsible for any errors arising in connection with the preparation of the data provided herein. No representation, warrant, or undertaking, express or implied, is given as to the accuracy or completeness of such information by Fiera Capital or any other person; no reliance may be placed for any purpose on such information; and no liability is accepted by any person for the accuracy and completeness of any such information.

These materials are not intended as investment advice or a recommendation of any security or investment strategy for a specific recipient, investments or strategies that

may be described herein are provided as general market commentary. Nothing herein constitutes an offer to sell, or solicitation of an offer to purchase, any securities, nor does it constitute and endorsement with respect to any investment area or vehicle.

Any charts, graphs, and descriptions of investment and market history and performance contained herein are not a representation that such history or performance will continue in the future or that any investment scenario or performance will even be similar to such chart, graph, or description.

In addition to the risks associated with all investments, investments in emerging markets may be more volatile and less liquid than other investments. Investments in emerging markets are also subject to currency fluctuations, political instability, and other economic and market risks.

Forward Looking Statement

Discussions regarding potential future events and their impact on the markets are based solely on historic information and Fiera Capital’s estimates and/or opinions and are provided for illustrative purposes only. A number of the comments in this document are based on current expectations and are considered “forward-looking statements”. Actual results, however, may prove to be different from expectations. The opinions expressed are a reflection of Fiera Capital’s best judgment at the time this document is compiled, are subject to change at any time without prior notice, cannot be guaranteed as being accurate, and any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise is disclaimed. Furthermore, these views are not intended to predict or guarantee the future performance of any individual investment strategy/style, security, asset class, markets generally, nor are they intended to predict the future performance of any Fiera Capital investment vehicle or portfolio.

INDEX DEFINITIONS:

S&P 500 – is a stock market index made up of approximately 500 US large cap stocks. It is often used as a common benchmark for US stock funds. The index comprises a collection of stocks of 500 leading companies and captures 80% coverage of available market capitalization. Index results assume the re-investment of all dividends and capital gains.

MSCI EAFE Index – Is a stock market index made up of approximately 909 constituents. It is often used as a common benchmark for international stock funds. The index comprises the MSCI country indexes capturing large and mid-cap equities across developed markets in Europe, Australasia and the Far East, excluding the U.S. and Canada. Index results assume the re-investment of all dividends and capital gains.

MSCI Emerging Markets Index – is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

Intermediate Agg – The Bloomberg Barclays Intermediate US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market with less than 10 years to maturity. The securitized sector is wholly included. The index includes Treasuries, government-related and corporate securities, MBS, ABS and CMBS.

Bloomberg Barclays 1-10 Year Municipal Index – The Bloomberg Barclays 1-10 Year Municipal Blend Index is a market value-weighted index which covers the short and intermediate components of the Barclays Municipal Bond Index—an unmanaged, market value-weighted index which covers the U.S. investment-grade tax-exempt bond market. The 1-10 Year Municipal Blend index tracks tax-exempt municipal General Obligation, Revenue, Insured, and Prerefunded bonds with a minimum $5 million par amount outstanding, issued as part of a transaction of at least $50 million, and with a remaining maturity from 1 up to (but not including) 12 years. The index includes reinvestment of income.

ICE BofAML High Yield Index – ICE BofA US High Yield Index tracks the performance of US dollar denominated below investment grade corporate debt

publicly issued in the US domestic market.

ICE BofAML Fixed Rate Preferreds Index – tracks the performance of fixed rate US dollar denominated preferred securities issued in the US domestic market.

The Russell 1000 Growth Index is designed to be a measure of the large mid-sized capitalization companies in the United States equities market.  The index is a composite of roughly 1,000 securities issued by the largest companies in the U.S. in terms of market capitalization.  The Russell 1000 Growth Index is a subset of the securities found in the Russell 1000 Index. The stocks included in the growth index are selected based on a “probability” of growth as measured by their Institutional Brokers’ Estimate System (I/B/E/S) forecast of medium-term growth (2 year), and sales per share historical growth (5 year).

The Russell 1000 Index is designed to be a measure of the large and mid-sized capitalization companies in the United States equities market.  The index is a composite of roughly 1,000 securities issued by the largest companies in the U.S. in terms of market capitalization. The stocks included in the value index are selected based on a “probability” of value as measured by their relative book-to-price (B/P) ratio.