We expect the Vol to continue…
This week was one of those weeks that investors will remember. The volatility was obvious from the headlines. Negative news is always widely published, so on down days, it is easy to see the “red” highlights. Up days are not published as much. They are met with relief but, from our perspective, both are not great. Excess volatility is not good for the financial system. Markets like stability, clear messaging and logic. This is because they are representative of the business community. CEOs like stability; they can make investments with stability; they can hire people with stability; and they can produce and innovate new products & technology with stability. Unfortunately, the current US administration has created instability. Figure 1 presents what we have experienced this week in the context of the past 43 years (when the data was available). As you can see, we had intra-day returns that where amongst the highest on record.
Figure 2 presents the bond market for the past 5 days. This is getting a little into the weeds, but the chart presents huge volatility in the fixed income market and is essentially what caused the US administration to back track on its tariff policy. As you can see, rates have returned today to what they were on Wednesday when the “forced” policy adjustment was made. This causes us to conclude that the issues that spoked investors are still there and that we should expect more financial market volatility for the time being.
“This means that” we should keep investing and adjusting the mandates the same way as we always do. We expect more days like we have had this week and have been actively trading our funds and portfolios to take advantage of opportunities that present themselves. As always, we are operating with a diversified approach: making switches, putting cash to work and holding some aside for the future.
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
Changes in Leverage. We are increasing the asset ceiling to 2.0 times the market value of equity for Pathfinder International Fund and Pathfinder Conviction Fund to be consistent with Pathfinder Partners’ Fund and Pathfinder Resource Fund.
For more information, please follow the links above to review the fund term sheets.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
Pathfinder Asset Management Limited (PAML) and its affiliates may collectively beneficially own in excess of 10% of one or more classes of the issued and outstanding equity securities mentioned in this newsletter. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor PAML can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your portfolio manager, who can assess all relevant particulars of any proposed investment or transaction. PAML and the author accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.