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A letter from our CEO: A stronger path ahead

July 2021

As the pace of vaccinations continues to rise around the country, I’m optimistic the worst of this era is behind us. And while we aren’t out of the woods yet, I’m confident we will emerge from this crisis stronger than before.


The second quarter of 2021 certainly brought more hope and economic optimism for investors. Global equities continued to perform bullishly on the back of recovery hopes and strong corporate earnings expectations. The TSX Composite Index rose 7.83%, hitting new highs in June, on the back of banking and commodities performance while the S&P 500 finished the first half of the year with a total return of 15.2%.


Our equity strategies also performed well in the quarter and during the first six months of 2021 with our Canadian and U.S. strategies both posting double-digit gains on the year so far.


Inflation dominated headlines as the Federal Reserve continues to parse whether the recent data is transitory or structured in nature. The Treasury yield curve flattened, with the 10-year yield ending about 25 basis points below the 2021 peak of 1.7%. Our view is the Jackson Hole policy symposium will be critical this year and may signal a change in stance for the Fed should inflationary pressure continue to rise.


The Bank of Canada (BoC) in its latest policy update said it would again reduce its weekly bond-buying program, while officials held the benchmark overnight interest rate at 0.25%. “This adjustment reflects continued progress towards recovery and the Bank’s increased confidence in the strength of the Canadian economic outlook,” Bank of Canada Governor Tiff Macklem said during opening remarks.


Macklem reiterated the bank plans to keep its key interest rate near zero until at least the second half of next year, which could signal a divergence from the Fed, putting Canada among the first of global central banks to advance a rate hike cycle, rather than following the lead of global counterparts. The BoC anticipates CPI inflation of 3% this year, 2.4% in 2022 and 2.2% in 2023.


A booming global economy, still-supportive monetary policy and impressive corporate earnings deliver powerful tailwinds to markets. But uncertainty remains. Three key factors we continue to watch are valuations on asset prices, global central banks beginning to raise interest rates and the long-term narrative on inflation. Despite the uncertainty, our actively-managed strategies allow us to capitalize on opportunities for our clients in light of current market conditions.


Product update

Earlier in June, we announced the addition of the GS+A U.S. Dollar High Interest Cash Strategy to our lineup. We wanted to create a product that offers many of the traditional benefits of cash, but also provides a relatively favourable rate of return within our current interest rate environment.


This strategy can ideally be used for your short-term cash needs, to create a more seamless experience for clients who invest in our U.S. dollar strategies, and to help reduce overall portfolio risk.


We are currently working closely with our partners at Onex Credit  to ensure access to our new Onex Falcon strategy. As we first mentioned in December, Onex Falcon is a leading U.S. private credit manager, providing credit financing solutions to middle and lower-middle market companies. With more than 20 years of experience, the Onex Falcon team will bring its distinct sourcing capabilities and an enviable performance record to the already competitive lineup of alternative strategies available to Gluskin Sheff clients.


And be on the lookout in September for an exciting announcement with regard to the expansion of wealth planning value-add services. We are excited to tell you more in the coming months on how Gluskin Sheff will evolve our strategic philanthropy practice to better suit the needs of our ever-evolving clients.


We thank you for your continued patronage and are excited for the day when we can gather together in celebration soon.


Sincerely yours,

Jeff Moody

President & Chief Executive Office

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