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2021 1st Quarter Market Outlook

18 December 2020 by National Bank
Q1 market outlook

While 2020 has shown us that we can’t always predict what a year has in store, there are still some good reflexes to rely on to better prepare for the year ahead. 

The NBI Global Equity Fund’s portfolio manager Fiera Capital explains how its approach focusing on higher-quality companies can pay off in the long run. Check out the comments from the portfolio manager of this fund, which is included in several NBI Portfolios1.

Markets in a nutshell

The stock market had a memorable, roller coaster kind of year. First, COVID-19 led to an unprecedented market decline followed by an exceptional rebound. Then there was a slight return to a sense of caution followed by a rise in global stock markets in the wake of the U.S. election and encouraging vaccine news.

Perspectives and challenges

In such an eventful year, the main challenge is to remain disciplined and have the patience to not react hastily and be led by your emotions.

It is essential not to be influenced by external factors and conversely, to put things into perspective and take the time to ensure that our companies’ long-term investment theses remain valid.

Investment opportunities

Long-term investors enjoy a major advantage: they are able to determine the true value and potential of a company in which they invest over several years. This allows them to take advantage of volatile markets, whose vision is often influenced by short-term objectives.

When markets get excited, the value of a company’s long-term quality attributes—such as high barriers to entry, strong pricing power, sustainable competitive advantages and a strong management team—is often underestimated by markets, creating bargains for the most patient investors.

It is only by looking at compound returns over several years that it becomes possible to detect the prevalence of high-quality strategies.

Benefits of active selection over time

Fund strategy

We generally hold our positions over an investment horizon of several years, not months or quarters. We always strive to identify high-quality companies with sustainable competitive advantages that operate in industries with high barriers to entry. These two elements give them considerable power in the pricing process.

We remain confident that our bottom-up, fundamental, authentic approach focused on higher quality companies will continue to deliver strong long-term returns in any macroeconomic environment.

Legal disclaimer

1 The NBI Global Equity Fund (the “Fund”) is offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Fiera Capital Corporation acts as portfolio manager for the Fund.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Fund before investing. The Fund’s securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Fund is not guaranteed, its values change frequently and past performance may not be repeated.

Views expressed regarding a particular company, security, industry, market sector, future events (such as market and economic conditions), company or security performance, upcoming product offerings or other projections are the views of only Fiera Capital Corporation, as of the time expressed and do not necessarily represent the views of National Bank of Canada and its subsidiaries (the “Bank”). Any such views are subject to change at any time based upon markets and other conditions, which could cause actual results to differ materially from what Fiera Capital Corporation presently anticipate(s) or project(s).

The Bank disclaims any responsibility to update such views. These views are not a recommendation to buy or sell and may not be relied on as investment advice.

© 2021 National Bank Investments Inc. All rights reserved. Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank Investments Inc.

The information herein are subject to change. National Bank Investments Inc. has taken the necessary measures to ensure the quality and accuracy of the information contained herein at the time of publication. It does not, however, guarantee that the information are accurate or complete. The services described are only provided to investors who have entered into an agreement with National Bank Investments Inc.

The information and the data supplied in the present document, and comments of the portfolio managers, including their opinions and forward-looking statements as well as those supplied by third parties, are considered accurate at the time of their printing and were obtained from sources that we consider reliable. We reserve the right to modify them without advance notice. This information, these data and these comments are supplied as informational content only. No representation or guarantee, explicit or implicit, is made as for the exactness, quality and complete character of this information, these data and these comments. The opinions expressed are not to be construed as solicitation or offer to buy or sell shares mentioned herein and should not be considered as recommendations. The information presented does not create any legal or contractual obligations for National Bank of Canada or any of its subsidiaries.

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