A swift policy response = a positive equity market rally

June 17, 2020

We write to keep you up to date regarding the rapidly changing economic data and our view of the markets. As you well know, the U.S. and Canadian governments began initiating policy for a temporary shutdown of their economies in March in an effort to contain the spread of the COVID-19 virus. These past few months have passed very quickly, while - in many ways - this time has also felt like a lifetime.

As a result of the efforts to contain this health crisis, most economies around the world have entered into a recession. Unlike the Financial Crisis during 2008 and 2009, governments and central banks have responded swiftly with stimulus measures to support economies. These measures directed funds to individuals out of work and support to affected businesses, and have helped to buffer the impact on the economy to date.

As many areas of the economy begin to reopen, we are watching the markets closely as we believe that the economy will take time before it is functioning closer to its "normal" capacity. A return to normal will likely look different as consumer preferences for online services have changed and businesses are changing the way they work utilizing video conferencing and remote work arrangements. Advancements in technology and data communications infrastructure have allowed us to rapidly move towards an online world. In order for you to participate in these trends, we have increased exposure to technology companies that operate in growth areas such as communications infrastructure, cyber security, automation and robotics, medical technology and health care delivery.

Another interesting development brought on by the COVID-19 outbreak is the enhanced focus and attention on sanitization. Businesses have stepped up their cleaning protocols with counters to store carts being cleaned more frequently than ever before, not to mention the requirements that commercial buildings face before they are able to re-open their doors. We have reviewed options to gain exposure to this area and believe that Ecolab is a quality company that is well positioned to benefit from this trend. They provide sanitation products to businesses. In fact, the next time you visit your local Farm Boy or Loblaw, look out for their products. We continue to look for additional opportunities to invest in companies well positioned in the current environment.

We remain committed to our disciplined investment approach, ensuring that the holdings in your portfolio are of sound quality, characterized by low debt and the ability to generate cash. While your portfolio continues to maintain a healthy cash balance, we remain patient and thoughtful as we opportunistically add to existing positions on weakness, and add new companies into your portfolio that we feel are best positioned for the economic environment ahead.