Veronika Hirsch, portfolio manager at Arrow Capital
Focus: Canadian equities and alternative investing
MARKET OUTLOOK
Several important central banks have recently indicated their willingness to lower interest rates to combat slowing economic growth. Weaker than expected reported inflation along with softness in global trade caused by current tariff wars have been cited as reasons for the policy shift. With uncertainty surrounding Brexit, U.S. policy toward Iran and a drawn-out and unpredictable presidential election campaign in the U.S., investors have to be prepared for market volatility. The upcoming earnings season is unlikely to provide much support for currently elevated equity valuations. However, these hurdles have to be tempered with central bankers’ determination to extend current economic cycle. President Trump desires a strong market and needs a thriving economy to improve his re-election chances. At this point, I am not willing to bet against him.
TOP PICKS
SPDR GOLD TRUST (GLD.O)
The recent pivot by Fed Chair Jerome Powell toward potentially lowering interest rates later this year has improved gold fundamentals. Lower interest rates would cause weakness in the U.S. currency, which would benefit the price of gold. The added advantage of including gold in portfolios is that it frequently acts as a good hedge against volatile equity markets.
DOLLAR TREE (DLTR.O)
Dollar Tree operates a discount store format built around merchandise priced at $1. The company has resisted calls by activists in the past to introduce higher price points, which would significantly improve sales and profit margins. Recently, under pressure from investors, it has been testing several higher price points for rollout across the chain. This retailer is well positioned to benefit from rising wages currently enjoyed by its middle-income customers.
BROOKFIELD ASSET MANAGEMENT (BAMa.TO)
Brookfield operates an asset management company focused on real estate, infrastructure, private equity and renewable power. Management has been opportunistic by investing in out-of-favor countries or sectors, optimizing and expanding operations and eventually monetizing the investments when they became desirable to other buyers. The company can take advantage of weak financial or economic environment by negotiating favorable terms for its purchases, while disposing of assets at high prices during more prosperous times.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| GLD | N | N | Y |
| DLTR | N | N | Y |
| BAMa | N | N | Y |
PAST PICKS: FEBRUARY 28, 2018
CISCO SYSTEMS (CSCO.O)
- Then: $44.78
- Now: $55.73
- Return: 25%
- Total Return: 29%
CONSTELLATION BRANDS (STZ.N)
- Then: $215.48
- Now: $188.21
- Return: -13%
- Total Return: -11%
CCL INDUSTRIES (CCLb.TO)
- Then: $63.87
- Now: $63.60
- Return: -1%
- Total return: 1%
Total return average: 6%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CSCO | N | N | Y |
| STZ | N | N | Y |
| CCLb | N | N | Y |
FUND PROFILE
Arrow Canadian Advantage Alternative Class (Class F)
Performance as of: May 31, 2019
- 1 month: 1.23% fund, -3.06% index
- 1 year: 3.50% fund, 3.03% index
- 3 years: 5.04% fund, 7.62% index
Index: S&P/TSX Composite TR. Fund’s returns are based on reinvested dividends and are net of fees.
TOP 5 HOLDINGS
- iShares 7-10 Year Treasury Bond ETF: 12.55%
- Arrow Global Advantage Alternative F: 9.84%
- Boyd Group Income Fund: 6.78%
- Brookfield Infrastructure Partners LP: 3.95%
- StorageVault Canada Inc: 3.13%
Twitter: @ArrowCapital
Website: www.arrow-capital.com
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