2021 2nd Quarter Market Outlook

26 March 2021 by National Bank
Q2 market outlook

While the first quarter of the year was marked by market movement, encouraging news in the fight against COVID-19 offers a glimmer of hope.

Given this context, the portfolio manager of the NBI U.S. Equity Private Portfolio (1), Montrusco Bolton Investments Inc., outlines its strategy that may prove profitable in the long term. Read the comments of the portfolio manager of this fund, which is included in several NBI Private Wealth Management profiles.

Markets in brief

The U.S. market experienced significant fluctuations in the first quarter of 2021. It began with historic images of the assault on the Capitol by supporters of outgoing President Donald Trump. The market rebounded quickly, followed by a return to calm and the announcement in mid-January of a major US$1.9 trillion stimulus package by the new President Joe Biden.

Other events also moved markets. Shares in GameStop and Reddit generated a lot of press, to the point of questioning market access regulations. In February, Bitcoin made headlines, hitting a new high.

Finally, hope was restored to markets with the arrival of COVID-19 vaccines, including the single-dose Johnson & Johnson vaccine approved by the U.S. Food and Drug Administration.

Outlook and challenges

For some time now, our scenarios have been indicating reduced demand for goods and services due to various demographic and economic factors. Added to this is the unforeseen factor of the pandemic, which is increasing negative pressure on most financial predictions in our investment universe.

Financial support and hope for a quick economic recovery have positively influenced anticipated corporate earnings. Nevertheless, we expect increased uncertainty caused by:

  • Changes in supply chains
  • Consumer behaviour
  • An increasingly digital economy
  • Government and private company debt levels

Automation and digitization of the economy could threaten the prospects for a return to pre-COVID employment levels. If governments continue to invest heavily to support incomes and offset declining demand, the risk of the spectre of inflation re-emerging could be added to market fluctuations.

We continue to see incongruities in the sometimes-high valuations of corporate stocks as well as in external analyses that suggest purchasing certain overvalued companies.


Our competitive advantage lies in our team culture and our investment process. Our added value comes primarily from our stock selection, focusing on quality growth. When we analyze the added value of our portfolio generated over the past 12 years, we see that it comes in part from our style and balanced stock selection.

Growth of $10,000

Fund strategy

Our investment strategy follows a high-conviction, growth at reasonable price (GARP) approach, grounded in fundamental and bottom-up analysis.

We rely on independent thinking to guide our investment decisions for each investment. We anticipate inflection points, misperceptions and catalysts through a proven process that promotes consistency and sustainability of our performance, regardless of market conditions.

Environmental, social and governance (ESG) considerations are incorporated into the process from the definition of the investment universe to stock selection, fundamental analysis, monitoring and sales decisions.

We remain confident that our approach can be profitable in the long term, regardless of the economic environment.


Legal disclaimer

1. The NBI U.S. Equity Private Portfolio (the “Fund”) is offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Montrusco Bolton Investments Inc. 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 Montrusco Bolton Investments Inc., 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 Montrusco Bolton Investments Inc. 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.

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