October 2024
Pembroke’s balanced strategies continue to provide investors with a mix of equity and fixed income investments designed to generate returns while managing risk.
In the third quarter, both the Canadian and Global Balanced strategies delivered solid results, benefiting from equity market gains and, to a lesser extent, bond market contributions.
CANADIAN BALANCED STRATEGY
Pembroke’s Canadian Balanced Strategy delivered attractive returns in the third quarter, led by strong gains in the equity portion of the portfolio, supplemented by appreciation and income from bond investments.
While returns in recent years have been skewed towards equities, a declining interest rate environment may allow bonds to make a greater contribution in the future.
The portfolio’s balanced and diversified asset allocation approach reduces volatility for investors with more conservative risk tolerance profiles or shorter-term liquidity needs.
GLOBAL BALANCED STRATEGY
Pembroke’s Global Balanced Strategy invests primarily in Pembroke-managed active equity funds, externally managed active equity and bond funds, and externally managed passive funds (Exchange Traded Funds or ETFs). The strategy has a bespoke benchmark with the following allocations: 30% FTSE Canadian Universe Bond Index, 45% MSCI All Country World Index (ACWI) and 25% S&P/TSX Composite Index.
The objective of the strategy is to provide long-term capital appreciation and income through a diversified exposure to global equities and bonds. The strategy also has the flexibility to invest in publicly traded real assets, such as gold. It is diversified by asset class, geography, sector, style (value versus growth and large capitalization versus small capitalization), manager and approach (active versus passive).
The strategy generated positive absolute returns in the third quarter of 2024, outperforming its benchmark, which rose slightly less. Over the period, the portfolio experienced positive absolute returns from all underlying funds and the gold allocation. The outperformance relative to the benchmark was driven by the strategy’s equity and gold allocations. However, this was partially offset by the fixed income allocation.
The strategy’s bond holdings underperformed the benchmark in the third quarter as the portfolio maintained a shorter average duration than the index during a period of falling interest rates.
At the end of September, the strategy’s bond allocation represented approximately 22.4% of the portfolio. The cash and gold bullion ETF allocations were approximately 1.8% and 4.5% of the portfolio, respectively.
Other Articles Of Interest
Disclaimer
This report is for the purpose of providing some insight into Pembroke and the Pembroke funds. Past performance is not indicative of future returns. Any securities listed herein, are for informational purposes only and are not intended and should not be construed as investment advice nor is it a recommendation to buy or sell any particular security. Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Pembroke seeks to ensure that the content of this document is correct and up to date but does not guarantee that the content is accurate and complete and does not assume any responsibility for this. Pembroke is not responsible for decisions or actions taken or made on the basis of information contained in this document.
