Summer 2018

We hope that the summer has gotten off to a good start for you and your family.

What’s new at Mandeville

 We are very humbled and honoured to have recently received the Fundserv Award for Advisor Network/Brokerage of the Year for the second consecutive year. It certainly helps solidify the trust and confidence that is so essential in our industry, and to be recognized by our peers as the top firm helps to reinforce to clients that they are dealing with an outstanding organization.

We are also very honoured to announce that our Founder and Chairman, Mr Michael Lee-Chin was awarded the Order of Ontario in February 2018.  The Order of Ontario recognizes individuals whose exceptional achievement in their field have left a lasting legacy in the province, in Canada and beyond. Order members come from all walks of life, represent diverse professions and have played an important role in shaping our province.

Congratulations Michael on an outstanding life achievement!

Mandeville continues to grow, attract new Advisor professionals to the firm as we continue our mission to be the top-tier wealth creation organization widely known for its democratization of investment opportunities, professional and disciplined investment approach, ethical behaviour, and superior treatment of clients, advisors, employees and all stakeholders.

What’s new at Mapledene Financial Group

 We recently created at new website at . We intend on writing a regular ‘Blog’ that ought to be of interest for our clients. We also have a direct link from our website to Mandeville for online access to your accounts. We encourage you to visit our website, and even share with your friends and family. Our website embodies our professional beliefs, our values and the services that we provide to clients.

We are also now on Facebook and posting articles of interest on a regular basis. We can be found under Mapledene Financial Group. We would be thrilled if you would help us to expand our digital presence by ‘liking’ our page.

We are also providing clients with articles of interest digitally through Mandeville’s online portal and by email. We hope you see value in receiving regular communications from our office.

Market conditions – Summer 2018

 The year 2018 has brought a return to volatility in stock and fixed income markets around the world. The daily business headlines continue to focus on President Trump, trade issues globally, NAFTA, the prospects of higher inflation globally and rising interest rates. Stock market volatility and rising interest rates has resulted in year to date investment performance which has been generally lower than in the past few years.

Economic conditions in the United States continue to be very strong, while other countries including Canada seem to be just plodding along. Economists are divided on when Canada’s economy might pick-up some momentum leading to a long-term rally in the Canadian stock market. Interestingly, ten years ago in June 2008 the TSX (Canada) stock benchmark was right around 15,000 points. Today, the TSX benchmark is right around 16,130. That is less than a 10% advance in ten years! Not much of a return to say the least.

There are those industry pundits that suggest low cost index investing is preferred to active investment management. Consider that while the Canadian index has produced virtually no return in the past ten years, generally most all Canadian equity mutual funds have produced returns far in excess of the index.

The topic of conversation on many Canadian’s minds, is what will happen to interest rates. We have daily conversations with our clients about interest rates and the impact on investments. In July 2017, the Bank of Canada surprised financial markets with the first interest rate increase in seven years, raising rates from 0.50% to 0.75%. Since then, we have seen interest rates increase twice to the current rate of 1.25%. Of course, Bank of Canada interest rate changes affects consumer loans, mortgages and bond yields in Canada. Canada is one of the most heavily indebted nations in the world by way of consumer and government debt. It is also probable that many of our real estate markets, particularly in major centres such as Toronto and Vancouver are overvalued. This does not paint a great picture of what could happen should interest rates be pushed up too far. The Bank is attempting to ‘normalize’ rates to cool inflation prospects, cool the housing market and reduce the growth in consumer debt.

Where do we go from here? While no-one knows when the Bank of Canada will stop their current campaign of raising rates, we do know at some point it will happen. While interest rates are still very low historically, they have increased considerably in the past year in the bond market. We are seeing some evidence of a slowing real estate market along with slower consumer borrowing. While I am not sure whether the end is here, I would say that we are likely getting closer. To use a baseball analogy, perhaps we are in the sixth or seventh inning of a nine-inning game. For those concerned about mortgage rates, my not so shiny crystal ball tells me that while rates may go up some more, they aren’t going up much more.

Higher interest rates generally cause declines in bond prices, dividend paying stocks such as utilities, pipelines and real estate investment trusts. This negatively affects performance in most all balanced type investment accounts. From an investment perspective, there is nothing wrong with dividend paying stocks and bond investments. They play an important part in a well balanced diversified investment portfolio. While we haven’t seen much performance this year, we will again at some point reasonably soon. It is also worth noting that bonds are generally safer than stocks, and usually fluctuate in value considerably less than stocks.

This year marks the ten-year anniversary of the crash in 2008. Our longer-term clients will surely remember the uncertainty and anguish that was caused during this period. As I look back on 2008, I am further convinced that a disciplined investment approach along with extreme patience from time to time is the way to superior long-term investment results. To quote Mr. Warren Buffett, ‘successful investing requires a sound intellectual framework and the ability to not allow emotions from corroding that framework’. Patience is something that is difficult to maintain during the daily barrage of news and opinions. However, it is patience that leads to the best investment results.

Brendan and I are both in the office all summer to meet our clients and to continue working on your investments. Should you require any information, or would like to meet with us, give us a call anytime. We are always available to provide outstanding service to you our valued clients.

We wish you and your family a great long summer and look forward to seeing you again soon.

Yours truly,

Jamie C. Hodgins, CIM, FMA, FCSI

Senior Investment Advisor

 This publication is solely the work of Jamie Hodgins, for the private information of his clients. Although the author is a Mandeville Private Client Inc. Advisor, he is not a financial analyst at Mandeville Private Client Inc. This is not an official publication of Mandeville Private Client. The views, opinions and recommendations are those of the author alone and they may not necessarily be those of Mandeville Private Client. This publication is not an offer to sell or a solicitation of an offer to buy any securities. This publication is not meant to provide legal, accounting or account advice. As each situation is different, you should seek advice based on your specific circumstances. Please call to arrange for an appointment. The information contained herein was obtained from sources believed to be reliable; however, no representation or warranty, express or implied, is made by the writer, Mandeville Private Client or any other person as to its accuracy, completeness or correctness.

Jamie Hodgins