April 2017 Investment Performance

The US stock market remained near all-time highs in April, while Q1/2017 US GDP grew at the slowest pace in three years. In our March 2017 Investment Performance Update, we said:

A slowdown in the US expansion is a growing risk that could challenge corporate earnings and stock market valuations in the coming months… US commercial and industrial loan growth has slowed dramatically with quarter-over-quarter growth contracting in Q1/2017 for the first time since 2009.

As expected, on April 28, 2017 the US Bureau of Economic Analysis released its estimate that the US economy grew at just a 0.7% annual rate in Q1/2017, slowing from 2.1% in Q4/2016. While corporate tax cuts in the US can help to offset the potential negative impact on corporate earnings from slowing US growth, there seems to be a significant uphill battle to pass the current US tax plan into law.

We remain cautious in our equity portfolios with the current environment of relatively higher valuations. As a result, the cash weighting remains elevated compared to historical levels, with the AFINA Optima10 at 33.5% of cash, versus 55% in the AFINA Affinity portfolio. We initiated positions in Qualcomm and Lear Corporation over the past several days as valuations for both companies have become attractive over the past few months.

An overview of the performance of our actively-managed products is as follows:

  • The AFINA Optima10 was up +0.7% in April, and was up +23.9% in 2016 compared to the benchmark return of +14.8%.
  • The AFINA Affinity was down 0.6% in April, and was up +20.6% in 2016 compared to the benchmark return of +14.8%.

Instruments (% return)Apr. 201720172016
AFINA Affinity(0.6)(0.2)20.6
AFINA Optima100.73.823.9
Benchmark (1)2.05.914.8