The bar is high, very high for pension fund and mutual fund managers. Looking forward to seeing the performance of our Deposit and Investment Fund for the year 2024.
Will the CEO, Charles Emond, and his team of Caisse managers succeed in generating competitive returns compared to the high returns on various financial markets?
The Toronto Stock Exchange barometer alone, the S&P/TSX index, reported a total return (with dividends) of 21.7% in 2024.
Even more efficient is the S&P 500 of the New York Stock Exchange. The world’s largest stock index exploded by 25%.
Important fact: for us, in Canada, once converted into Canadian dollars, this majestic increase of 25% (in US$) of the S&P 500 reaches 36%. The American dollar is worth $1.44 Canadian.
The other major American stock index which recorded a spectacular performance is the NASDAQ, which brings together the large high-tech multinationals.
The NASDAQ ended 2024 up 28.6%, without counting dividend yield. Canadian investors who hold index funds copying the NASDAQ thus come away with a return in Canadian dollars of 41%.
1. ELSEWHERE IN THE WORLD, WAS THE YEAR 2024 ALSO PAID?
Yes, but to a lesser degree. Here is the total return (with dividends) of other major foreign stock indices, in Canadian dollars.
– MSCI World without the United States: 14.2%
– MSCI EAFE (Europe, Australasia, Far East): 13.2%
– MSCI Europe: 11%
– MSCI Pacific (Japan, Australia, Hong Kong): 16.8%
– MSCI Emerging Markets: 17.3%
2. HAS THE BOND MARKET RECOVERED IN 2024?
With interest rates soaring between March 2022 and April 2024, the fixed income market, like that of tradable bonds, has previously experienced lean years.
The market changed course starting last June, when the Bank of Canada initiated a series of cuts in its key rate.
As a result, the FTSE Canada bond indices are back on the rise. Treasury bills ended the year up 4.9%. Medium-term Canadian bonds returned 4.2% and long-term bonds only 1.3%.
3. WHAT IS THE RETURN TO BE BEAT FOR THE FUND?
With a very simplistic balanced portfolio, made up of only three index funds (ETFs) that can be purchased on the Toronto Stock Exchange, here are the returns obtained in 2024, according to calculations carried out by the firm Aubin Actuaire Conseil.
The typical portfolio composed of 50% Canadian bonds (iShares XBB), 25% Canadian stocks (iShares XIC) and 25% global stocks (iShares
With a slightly riskier balanced portfolio, this time composed of 35% Canadian bonds, 32.5% Canadian stocks and 32.5% global stocks, the return obtained in 2024 rises to 18.1 %.
The Caisse’s challenge in 2024? Reporting a yield ranging from 15% to 18%!
