Current Outlook

Updated March 24, 2021


Note: The following strategies guide our advice to clients and are reflected in the fund allocations for the Founders Fund.

The recent equity market rise has been almost as dramatic as the fall was this time last year. Despite the runup, we’ve kept the equity weight in the Founders Fund close to its long-term target (it was as high as 66% in the spring of 2020). Our positioning reflects the potential we see in our equity holdings, which have rebounded nicely but are less sensitive to the overhyped areas of the market (EV, speculative technology, crypto).

Bonds continue to pose a challenge. Yields have risen sharply in recent weeks but remain at low levels. While they provide valuable diversification in a portfolio, their potential returns look modest with yields still near all-time lows. The Founders Fund is holding 23% in bonds, well below its 35% target.


The risk versus return trade-off for bonds remains unattractive. Real yields on government bonds (the yield after accounting for inflation) remain negative.

Over the next five years, we expect bonds to return between 1-3% per year, which translates to a 5-15% cumulative return. These returns are likely to come with higher volatility than investors have been accustomed to.

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. Instead, we’re holding cash which provides some defence when interest rates are rising and gives the fund liquidity.

Despite our modest return outlook, bonds remain an important tool for most clients. They provide safety when stocks are volatile (as they have been recently), and as such, are a diversifier for a balanced portfolio. The Founders Fund currently holds 23% in bonds and 16% in cash.


Our best estimate for 5-year stock market returns (5-7% per year or 25-40% cumulative) reflects the significant rally over the last year.

That said, we do not own “the market”. The rebound has been uneven, with some sectors faring better than others. For example, the Nasdaq index, a proxy for U.S. technology companies, was up more than 40% in 2020 while the more diversified stock market (S&P 500 Index) was up 18% in U.S. dollar terms. Our managers are more diversified and we believe the long-term prospects of the companies we own remain compelling.

The Founders Fund currently holds 61% of its assets in Canadian and global stocks, which is in line with its long-term target of 60%.

Specific Advice

If you would like an assessment of your portfolio or a second opinion, give us a call (1-888-888-3147). We provide advice and can help better align your investments to your personal situation.

Founders Fund Asset Mix: March 23, 2021