Commentary

17 Apr 2014

By Rick Brown

Despite a weaker start to the year, the overall market performed reasonably well during Q1.  Demand for assets, as risk appetite returned to the market, helped push equity indices to all-time highs. With tensions in the emerging markets—particularly eastern Europe—giving the market reason to pause, investors seemed to shrug off concerns and view every pullback as a buying opportunity, pouring back into the market on any weakness.

17 Apr 2014

By Frank Mersch & Rick Brown

Equities Overview

The first quarter saw the re-emergence of the materials (+9.2%), and energy (+8.7%), sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

16 Apr 2014

Market Commentary

For the first quarter of 2014, MLPs, as measured by the Alerian MLP Index (“AMZ”) provided a total return of 1.9% with price performance contributing only 0.4% and the remainder earned from distributions or dividends. For context, the broader market, as measured by the S&P 500, provided a similar return of 1.8% with price performance contributing a more meaningful 1.3%.

15 Apr 2014

By Frank Mersch

The first quarter saw the reemergence of the materials (+9.2%) and energy (+8.7%) sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

15 Apr 2014

By Norm Lamarche

Global equity markets were challenged in the first 3 months of 2014 in what proved to be a headline-driven quarter. In the world’s largest economy, for example, economic activity was disrupted by the harsh ‘polar vortex’ weather. The world’s second largest economy, China, showed continued deceleration—beyond the Chinese government’s stated economic targets—leaving analysts to reset their growth expectations lower. The first quarter was also geopolitically charged, with tensions in Russia at the fore.

15 Apr 2014

By Norm Lamarche

Global equity markets were challenged in the first 3 months of 2014 in what proved to be a headline-driven quarter. In the world’s largest economy, for example, economic activity was disrupted by the harsh ‘polar vortex’ weather. The world’s second largest economy, China, showed continued deceleration—beyond the Chinese government’s stated economic targets—leaving analysts to reset their growth expectations lower. The first quarter was also geopolitically charged, with tensions in Russia at the fore.

15 Apr 2014

The Front Street Value Class has been positioned to take advantage of 3 main themes that we see developing in the U.S. market.

15 Apr 2014

By Frank Mersch & Rick Brown

Equities Overview

The first quarter saw the re-emergence of the materials (+9.2%), and energy (+8.7%), sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

15 Apr 2014

By Norm Lamarche

Global equity markets were challenged in the first 3 months of 2014 in what proved to be a headline-driven quarter. In the world’s largest economy, for example, economic activity was disrupted by the harsh ‘polar vortex’ weather. The world’s second largest economy, China, showed continued deceleration—beyond the Chinese government’s stated economic targets—leaving analysts to reset their growth expectations lower. The first quarter was also geopolitically charged, with tensions in Russia at the fore.

14 Apr 2014

By Frank Mersch & Rick Brown

Equities Overview

The first quarter saw the re-emergence of the materials (+9.2%), and energy (+8.7%), sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

14 Apr 2014

By Frank Mersch

The first quarter saw the reemergence of the materials (+9.2%) and energy (+8.7%) sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

14 Apr 2014

By Craig Porter

In the first quarter, two of the top three subsectors on the TSX were resource related: energy and materials. The materials sector was primarily driven by its gold components, solely as a result of a higher bullion price. But something different is happening in the energy patch: companies are growing production, and expectations of higher earnings are starting to increase.

14 Apr 2014

By Frank Mersch

The first quarter saw the reemergence of the materials (+9.2%) and energy (+8.7%) sectors as big drivers, due to their overall weightings, of the performance in the S&P/TSX Composite Index in Q1. In absolute terms, auto components and pharmaceuticals performed the best, ranking one and two respectively. The weaker performers were telecommunications companies (+3.0%), financials (+1.9%), and industrials (+1.8%).

28 Jan 2014

OFI SteelPath Macroeconomic Overview
MLPs underperformed the broader markets in the fourth quarter, lagging behind the S&P 500 by 5.2% on a total return basis. Though performance lagged the broader market, the 5.3% total return provided by the asset class, as measured by the Alerian MLP Index (AMZ), was healthy on an absolute basis and relative to the sector’s historical performance; over the past ten years, average quarterly total return has been 4.2%.

24 Jan 2014

Diversified Income Class

During the last quarter, we completed the task of addressing the legacy issues in the Front Street Diversified Income Class. The exercise was necessary to enable the fund to perform much more in line with what one would expect of a Canadian neutral balanced fund. Although we are not happy with the relative performance over the quarter, we are very positive about the potential for the year ahead for a number of reasons, discussed below.

24 Jan 2014

Special Opportunities Class

Stock markets climbed the proverbial ‘wall-of-worry’ in 2013, and many worries were the same as they have been since the credit crisis of 2007-2008.

2013 began with a European economy in flux, a U.S. economy seemingly improving, but plagued with a Congress and Senate that were unable to deal with day-to-day issues, sending markets into frenzies with budgetary or debt ceiling issues. China and the rest of the emerging-market world economies were still decelerating, without a bottom in sight.

24 Jan 2014

Oil trading was fairly subdued over the quarter, with West Texas oil averaging about $97 U.S. per barrel. At their most recent meeting, OPEC felt there was no need to adjust production levels, as supply and demand remained fairly well-balanced. Global demand for oil increased by about 1 million barrels per day. However, the only region that showed any sign of growth was the U.S., where production grew by about a million barrels. OPEC is limited in its ability to increase production with issues hampering Iran, Iraq, and Libya’s production.

24 Jan 2014

Over the past six months I have talked about how the market reminds me of the 1990’s, my Altamira days. Given the year that has just passed, many are asking about the sustainability of this rally and “are we in a bubble"?

11 Nov 2013

Equity Portion of Diversified Income Class

15 Oct 2013

During the month of September, the fixed-income market priced in the high probability of the Federal Reserve Bank’s likely decision to start tapering and, as a result, the 10-year U.S. government bond yield made an intra-day high of over 3%. After the Fed shocked the market by delaying the removal of the stimulus, the rate market rallied strongly, with longer duration bonds outperforming as the 10-year yield dropped to finish the month at 2.611%.

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Disclaimer:

The opinions expressed herein reflect those of the individual portfolio manager. These opinions are subject to change at any time based on market or other conditions, and Front Street Capital disclaims any responsibility to update such views. These opinions may differ from those of other portfolio managers or of Front Street Capital as a whole.

These views are for informational purposes only and are not intended to be a forecast of future events, a guarantee of future results or investment advice. All data referenced herein are from sources deemed to be reliable but cannot be guaranteed.

These views may not be relied upon as investment advice and, because investment decisions are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of Front Street Capital. Any discussion of any of the funds’ holdings are as of the podcast interview date, and are subject to change.

If specific securities are referenced, they have been selected by the portfolio manager on an objective basis to illustrate the views expressed herein. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. Referenced securities may not be representative of the portfolio manager's current or future investments and are subject to change at any time.