October was a relatively calm month for stocks. In contrast, November entered with a roar as pre-election selling began and volatility increased. As we mentioned in last month’s update, regardless of the outcome of the US election, rising interest rates will continue to drive more money into US equity markets as fixed income moves out of favour. Furthermore, with the Republican party taking control of the House and Senate, US stocks have gained 7.1% annually on average when the White House and Congress were controlled by the same party (albeit not as strong as 10%+ gains with a Democratic President and Split Congress).
The AFINA investment products continued to outperform in 2016. Cash levels across our actively managed products remained relatively high as we were risk averse in the near-term given the polarizing US election. However, following the election we deployed cash and have since reduced the Affinity cash weight to 41% and the Optima10 to 14.5%.
A summary of the AFINA investment product performance is as follows:
- The AFINA Affinity was down 0.9% in October and up +13.9% in 2016. The AFINA Affinity is currently up +3.0% in November. Furthermore, we have now completed the full transition of this portfolio from a limited partnership fund structure to a managed account at our partner NBCN.
- The AFINA Optima10 was down 0.5% in October and up +12.1% in 2016. The Optima10 is currently up +5.4% in November.
As of October 31, 2016. All figures are net of fees and other expenses. Past performance is not indicative of future results. Refer to https://www.afinacapital.com/legal/ for full details and disclosures.
(1) The AFINA Affinity Fund LP fully hedges its US dollar exposure. Accordingly, the AFINA Affinity Fund LP benchmark represents the 50% weighting of the S&P 500 Total Return Index in US dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.
(2) The AFINA Optima10 Managed Account does not hedge its US dollar exposure. Accordingly, the AFINA Optima10 benchmark represents the 50% weighting of the S&P 500 Total Return Index in Canadian dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.