Current Outlook

Updated March 6, 2023


The following strategies guide our advice to clients and are reflected in the positioning of the Founders Fund.

Global supply chains were already tight, but the combination of a war in Europe, a shortage of materials, and a tight labour market have converged to cause some of the highest inflation in decades.

Policy makers are walking a fine line. Central banks are focused on bringing inflation down by raising interest rates and cooling the economy, but their actions could cause too much of a slowdown, or even a recession. The result is that both bonds and stocks are experiencing bouts of elevated volatility.

As investors, the good news is that many of the risks are in plain sight and embedded in the prices of stocks and bonds today. Moreover, there are positives mixed in with the waves of negativity. The employment outlook remains good, the ever-increasing use of technology will help moderate cost increases, and the middle class continues to grow rapidly in the developing world.

While there are no clear answers to the global challenges driving stocks lower, the breadth of price declines has brought opportunities. Our equity managers have been buying new companies and topping up existing holdings. We’ve taken our cue from them with respect to the positioning of the Founders Fund. The cash allocation has fallen from 14% at the end of 2021 to 7% today. We’ve added to both stocks (63%) and bonds (30%). In the Builders Fund, we’ve made sure the fund is close to fully invested in equities. We encourage you to start deploying any cash you might be sitting on and ensure your mix of stocks and bonds is on target.


The risk versus return trade-off for bonds has improved but returns are likely to come with higher volatility than investors have been accustomed to as yields react to changes in inflation and central bank activity. Over the next five years, we expect bonds to return between 3-5% per year, which translates to a 15-25% cumulative return.

Bonds remain an important tool for most clients. They can provide safety when stocks are volatile, and as such, are a diversifier for a balanced portfolio.

Our Income Fund is positioned defensively. It also owns real return bonds to protect against rising inflation. In the Founders Fund, we’ve maintained our below-target weight in bonds (30%) but have increased the allocation with the rise in yields. We continue to hold an above-target weighting in cash (7%), which provides some defence when interest rates are rising and gives the fund liquidity. Further, yields on short-term cash investments such as T-Bills have risen significantly this year, making the asset class more attractive. Our Savings Fund has a pre-fee yield of 4.7% (as of March 3).


Our outlook for 5-year stock market returns has increased to 6-8% per year (or 30-45% cumulative), which is in line with long-term equity returns. For context, we expected 4-6% at the beginning of 2022. Our fund managers see more attractive opportunities than they did just a few quarters ago. Specifically, our global-oriented managers have found an increasing number of investment ideas.

The Founders Fund has increased its stock allocation to 63%. We started 2022 close to the fund’s long-term target (60%) but increased our weighting as the market declined last year.

Specific Advice

If you would like an assessment of your portfolio or help with developing an investment strategy, we encourage you to book a meeting with us. We provide clear-cut advice and can help better align your investments to your personal situation.

Founders Fund Asset Mix: March 3, 2023