Dear Clients,
We are writing to provide you with a Portfolio Update, following the strong rebound in the performance of your portfolios in the first half of 2023 and into this month.
In past updates, we discussed key outcomes of the global pandemic which contributed to market forces that were particularly volatile and somewhat extreme in nature. These consequences of the pandemic included:
- Unprecedented savings accumulation
- Mass concentration of spending, first in goods and then in services
- Global supply chain disruptions and inventory challenges
- Labor market and wage pressures
All these outcomes contributed to a sharp rise in inflation beginning in early 2021 which, in turn, triggered a widespread re-pricing of capital market assets.
Understanding the underpinnings of the market upheaval in 2022 helped us to maintain confidence that inflation would subside as the global economy progresses beyond the various phases and after-shocks of the pandemic. Our investment approach has always been to focus on high quality companies with strong structural profitability and long-term tailwinds. While some of these companies have, to varying degrees, been whipsawed by unintended consequences of the pandemic, their long-term fundamentals have remained strong.
With inflation rates now receding, particularly in the United States, long-term interest rates have moderated and provided support for a solid recovery in equity valuations, particularly for those companies with compelling growth and profit outlooks. For us, these include our shares of technology platform leaders, high performance semiconductor companies, top luxury and premium brands, leading travel industry players and specialized financial services companies.
We see further upside for portfolios as inflation pressures continue to abate and as capital markets move beyond recessionary fears to consider recovery potential in areas of the market that remain restrained. Of course, the unexpected can always occur, as we saw with the global pandemic. However, it is abundantly clear to us that quality always prevails, and this will be no different in the future.
We continue to apply careful analysis to all our investment decisions and our strong performance track record, that spans close to two decades, demonstrates that our process works very well.
As always, if you have any questions for us, please do not hesitate to reach out.
Warm regards,
Woon Ai on behalf of Woon Ai Tsang Wealth Management Group
This commentary is based on information that is believed to be accurate at the time of writing, and is subject to change. All opinions and estimates contained in this report constitute RBC Dominion Securities Inc.'s judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates, market conditions and other investment factors are subject to change. Past performance may not be repeated. The information provided is intended only to illustrate certain historical returns and is not intended to reflect future values or returns.
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