Savings Fund

September 30, 2018

Market Context

  • The Bank of Canada (BoC) raised its key lending rate in July by 0.25%. The rate now stands at 1.50%.
  • Economic growth around the world continued at a steady pace, led by the U.S. Growth in Canada slowed a little, but the economy continues to operate close to capacity and inflation edged up, which helped facilitate the rate hike.
  • Overall, the BoC feels that higher interest rates will be warranted to keep inflation near its target, but investors should expect a gradual approach to rate adjustments.

Positioning

  • The manager’s (Connor, Clark & Lunn) preference for corporate paper continued to add value for the portfolio in the third quarter. Bank paper, floating rate notes and short-dated bonds comprise 70% of the fund.
  • Investments in T-Bills remain focused on provincial securities (30% of the fund).

  • The pre-fee yield of the fund at the end of September was 1.8%.