First Quarter 2014 Review

Canadian Equity
Canadian stocks were up 6.1% over the quarter, leading most developed markets. Returns were positive across all sectors. The health care sector continued to lead the way with a 12.6% gain. The materials sector rebounded from its poor performance in 2013 and posted the next highest return at 9.7%. The energy, utilities, and consumer staples sectors also outperformed the market. Small-cap stocks outperformed their large-cap counterparts over the quarter.

Global Equity
Global stocks were positive again, with the MSCI World Index returning 5.3% in Canadian dollars. Europe and the US both outperformed the market. In contrast, Japanese equities detracted value. The Canadian dollar continued to depreciate which helped boost the Canadian dollar returns of foreign assets. Emerging markets once again trailed developed markets thanks in part to declines in Russia and China. The recent events taking place in Ukraine have contributed to the volatility in the Russian market.

Fixed Income
The FTSE TMX Canada (formerly DEX) Universe Bond Index posted a 2.8% return for the quarter. The provincials, municipals and corporate sectors each outperformed the broader market while federal bonds lagged the market. Yields decreased across the Canadian curve during the quarter, especially in the long-end. Investors maintained their appetite for risk as high yield bonds outperformed investment grade issues. The Bank of Canada maintained its overnight rate at 1.0%, while the U.S. Federal Reserve left the Fed Funds Rate target unchanged at 0-0.25%.