The second quarter of 2022 proved difficult for Bâtirente’s diversified funds, according to the organization’s investment strategy manager.
“As was the case in the first quarter, Bâtirente’s diversified funds experienced a difficult second quarter performance . . . [with losses correlating with] their risk profile,” said Jean-François Dumais, in a press release.
The five diversified funds, designed to offer various degrees of risk tailored to the needs of different plan members, each experienced losses of between 4.63 and 8.87 per cent during the period. On an annualized basis, returns were also negative, with losses between 7.8 per cent and 13.91 per cent.
Dumais said returns were hampered by external circumstances. “Inflation continues to grow, due primarily to the ongoing pandemic as well as the war in Ukraine. In Canada, this inflation rate has even reached a 40-year high. And yet, various central banks increased their key interest rate in an aim to decrease the demand for goods and services and thereby slow down this inflation. These higher interest rates also affect financial markets.”
The worst results stemmed from global equities allocations. Bâtirente’s small-cap global equities portfolio declined 10.38 per cent during the second quarter of 2022, down 19.1 per cent for the year. Its large-cap global equities portfolio, which declined 10.03 per cent over the quarter, was down 18.02 per cent over the year.
Domestic equities also saw declines. The organization’s Canadian equity portfolio dipped 10.29 per cent during the quarter and 5.45 per cent over the year.
Returns from fixed income were also negative. Bâtirente’s treasury multi-fund declined 1.3 per cent over the quarter, as did its bond multi-fund, which dropped 4.6 per cent. “However, compared to the benchmark for these funds, this performance was still excellent mainly because of the shorter term involved, which is profitable in periods of inflation,” said Dumais.
“This second quarter was obviously quite difficult for financial markets — one of the worst since 1976. Historically, we’ve often seen markets rebound after very negative quarters. Moreover, several central banks responded robustly by raising their interest rate to reduce inflation, which could restore investor confidence.”