Q4-F22
Redefining Normal
Exiting the pandemic, we all hoped that the world would get back to normal, and in many ways it has. The investment landscape of the last twenty years has been atypical, however, with very low interest rates and significant monetary interventions. With central banks reversing course, the market normal that we settle on could be one that we have not seen in a while.
Here are some of the trends we think are redefining what normal looks like for markets in 2023:
As a result of these trends, we think the current investment landscape carries an above normal level of risk. Companies with strong balance sheets, sustained cash flows and capable management teams should still be able to navigate these risks with minimal downside. To sort out the good from the bad, we continue to benefit from the work of Veritas Investment Research, which remains one of the best research shops on the street.
In 2022, the NASDAQ was down -32.5%, the S&P 500 was down -18.1% and the S&P/TSX was down -5.8%. Both our funds closed out the year ahead of the three indices, with our Canadian Equity Fund posting a -1.0% return and our Absolute Return Fund returning -5.2%. (Performance based on F series).
As always, we remain focused on capital preservation during the current market volatility while seeking out the best opportunities to drive returns.
We thank you for your continued support.
Your fellow investors,
Anthony Scilipoti
Sam LaBell
Veritas Absolute Return Fund February 2023 Performance Sheets
Veritas Canadian Equity Fund February 2023 Performance Sheets
Source: Refinitiv, S&P Global, Veritas Asset Management estimates as at December 31, 2022. Past performance is not indicative of future performance. The S&P/TSX Composite Total Return Index is a Canadian dollar denominated, capitalization-weighted index that includes the largest float-adjusted stocks trading on the Toronto Stock Exchange, subject to inclusion criteria. The index provides the broadest representation of market-weighted returns for large capitalization Canadian-listed stocks, including reinvested dividends, making it an appropriate index for diversified portfolios that invest primarily in Canadian stocks, such as the Veritas Absolute Return Fund and the Veritas Canadian Equity Fund. While our funds are benchmarked against the S&P/TSX Composite, we may reference returns for the S&P 500 and NASDAQ Composite, as well as yields on U.S. ten-year Treasury bonds, which we view as relevant investment benchmarks for investors in North American equities. The S&P 500 represents approximately 80% of the total market capitalization of U.S. stocks and remains the most broad-based indicator of large-cap U.S. equity returns. In contrast, the NASDAQ has a greater proportion of technology and growth stocks, which we view as providing additional insight into investors' risk appetite. Where applicable, the ten-year U.S. Treasury rate is referenced as a measure of the lowest-risk investment alternative to equities (‘the risk-free rate’). Contact Veritas Asset Management Inc. for more information regarding comparative indices.
The information contained herein is for general information purposes and does not constitute a solicitation for the purchase or sale of securities. The full details of the Fund, its investment strategies and the risks are detailed in the Fund’s current simplified prospectus, annual information form, and fund facts document, copies of which may be obtained from Sedar, your dealer, Veritas Asset Management Inc. (“VAM”) or at Veritasfunds.com. Please read the prospectus before investing. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. All performance data assume reinvestment of all distributions or dividends and do not take into account other charges or income taxes payable by any unitholder that would have reduced returns. The performance of the Fund is not guaranteed, unit values change frequently and past performance may not be repeated. Performance is presented in Canadian dollars, unless otherwise stated, and is net of fees of Series F units of the Fund. VAM is an affiliate of Veritas Investment Research Corporation (“VIR”), which produces and issues independent equity research regarding public issuers to investors and other capital markets participants. VAM is a client of VIR and receives research reports from VIR at the same time as VIR’s other clients. VIR and VAM have implemented policies and procedures to minimize the potential for and to address conflicts of interest, which are available upon request.
Cautionary Note Regarding Forward-Looking Statements
The information in this release may contain forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that Veritas Asset Management Inc., the Portfolio Manager, or any affiliates thereof (the ‘Companies’) believe, expect, or anticipate will or may occur in the future (including, without limitation, statements regarding any targeted returns, projections, forecasts, statements, and future plans and objectives of the Companies) are forward-looking statements. These forward-looking statements reflect the current expectations, assumptions or beliefs of the Companies based on information currently available to the Companies. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Companies to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Companies.
For a list of factors that could cause actual results or events to differ materially from current expectations, please refer to our Prospectus and the section 'Risk Factors'. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Companies disclaim any intent or obligation to update any forward-looking statement, whether as a result of new information, future events, or results or otherwise. Although the Companies believe that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.