Market outlook: Fourth quarter 2021

07 October 2021 by National Bank
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In the coming years, major changes in the technology, biology and energy sectors could bring challenges and opportunities, notes the portfolio manager of the NBI Canadian Equity Growth Fund (1), Mackenzie Financial Corporation Read the comments of the portfolio manager of this fund, which is included in NBI Portfolios.

Markets in brief

At the time of writing, markets globally have continued to rebound from COVID-19, moving steadily higher. The initial stages of the rally were concentrated in technology and stay-at-home companies. As progress with vaccines was announced, markets shifted towards favouring businesses that would benefit from a reopening, including more cyclical companies.

As concerns surface about the more persistent Delta variant and its impact on the successful reopening of the economy, the focus has returned to technology and long-term growth areas.

Outlook and challenges

Economic growth rates have peaked and are beginning to slow. While this slowing was inevitable, as recent growth rates have been extraordinary due to the rebound from a locked-down economy, the normal post-COVID economic growth rate is unknown. There are several significant changes that have been driven by the pandemic, including:

  • A larger role for government, particularly in the United States
  • Deglobalization of supply chains
  • A shift towards working from home

How these changes will play out is difficult to forecast. There is greater risk of sustained inflation as well as a possibility for financial stress from higher levels of debt outstanding globally.


As we think about the 2020s as a decade, it appears that there will be substantial disruptive technological change. Decarbonization requires a massive shift in the global energy industry away from fossil fuels and towards renewables. While ultimately the new energy system will be both cheaper and better, it will be a long road to get there.

The past decade has seen major breakthroughs in biology, and we will begin to see the impact this decade. There will be considerable progress on biotechnology, as new tools and discoveries spill over into drug creation. More broadly, there is the potential for considerable change in the global food supply, with engineered proteins replacing those derived from animals.

During the 2010s, we began the move towards cloud computing. The 2020s will see a further wave of digital innovation on a massive scale. The combination of 5G communications, artificial intelligence, and digital twin technology will revamp manufacturing globally.

As always, change brings both investment opportunity and risk. Our investment process emphasizes the careful selection of individual quality growth companies. We are extremely mindful of the potential for negative impacts on industries caused by large technological shifts and look to avoid those areas. Established companies benefiting from technological improvement continue to be an important component of our investment portfolios.

While it may be easy to be overwhelmed by short-term uncertainty and risk, it is important to remember that companies, and people, are highly adaptive. The long history of equity markets is an optimistic one—the ability to find opportunities that outweigh the challenges is clear across decades.


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Returns are net of fees (F Series), in Canadian dollars.
Source: Mackenzie Financial Corporation

Fund strategy

Our investment strategy focuses on building a well-diversified portfolio of conservative growth companies. We believe each investment will continue to outgrow its peers while showing superior profitability, generating strong free cash flow, and maintaining the flexibility necessary to weather difficult economic environments.

While our primary emphasis is on bottom-up analysis of individual investments, we also incorporate broader micro, macro, and ESG analysis to identify and avoid industry risks before they are fully reflected in stock prices.

We have invested through many different cycles and environments in the past and continue to believe that companies with these characteristics, bought at sensible prices, will outperform over time.

Legal disclaimer

1 The information and the data supplied in the present document, including those supplied by third parties, are considered accurate at the time of their printing and were obtained from sources which we considered reliable. We reserve the right to modify them without advance notice. This information and data are supplied as informative content only. No representation or guarantee, explicit or implicit, is made as for the exactness, the quality and the complete character of this information and these data. The opinions expressed are not to be construed.  

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 Mackenzie Financial 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 Mackenzie Financial 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.

NBI Funds (the “Funds”) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Funds before investing. The Funds’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Funds are not guaranteed, their values change frequently, and past performance may not be repeated.

All performance shown is for F Series. F Series is offered as part of a “fees for services” program and as such, the performance shown does not include the compensation paid by the investor to the dealer, which would have reduced returns. Other series of units of the NBI Funds may be subject to higher management fees, which may result in lower returns.  The indicated rates of returns are based on the historical annual compounded total returns including changes in securities value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.

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