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Market Update: What We’ve Learned About the Pandemic’s Impact on the Economy

April 8, 2020

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Market Update: What We’ve Learned About the Pandemic’s Impact on the Economy

Market Insights News

March marked a hairpin turning point in North America’s understanding of the impact of the global coronavirus crisis.

In this article, we’ll offer some analysis on what’s happening in the economy now, and how market trends are impacting WealthBar portfolios. But first, here’s a look at how this unfolded:

Timeline: COVID-19 & the global economy

In mid-February, there were no significant outbreaks in Europe or North America and it was largely business as usual in the stock market with the S&P 500, NASDAQ and the S&P/TSX Composite hitting record highs.

Once COVID-19 started to spread across Europe and North America, however, global equity markets quickly turned as entire countries locked-down their borders and halted non-essential business operations. 

Source: MorningStar Data

Recession and recovery: what happens next?

The expected recession we’re seeing is unlike those that have come before it because of how suddenly it arrived. The containment measures to control the spread of the virus have resulted in the global economy grinding to a halt as whole industries pause operations to protect their employees and customers. As a result, we are seeing loss of corporate earnings, significant layoffs, and extreme uncertainty in global stock markets. 

Recovery will depend on the magnitude and duration of containment efforts. It’s encouraging to see jurisdictions across the globe mobilize quickly to expand testing and enforce physical distancing. Meanwhile, the scientific community is moving quickly to develop vaccines, with the first human trial already underway. Some jurisdictions are also starting to approve and distribute tests to identify people with coronavirus antibodies who may be able to resume their regular work and activities.

Stimulus is the other part of the economic equation: governments and central banks around the world are taking extraordinary measures to cushion the blow of the resulting financial crisis for individuals and businesses. So far, major world governments have committed US$7 trillion worldwide to help combat the global economic slowdown. In Canada, the government has introduced relief for those suffering from lost income which should help keep many in their homes and out of bankruptcy.

Both Canada and the US have introduced significant interest rate cuts, which is positive given the high level of uncertainty we’re seeing right now. Historically, low interest environments have been effective at stimulating demand during slowing economic times. In the short-term, these measures should provide some stability and mitigate the downside on equity markets.

In the coming weeks and months, we expect market volatility to continue as investors weigh the consequences of the spreading virus against the potential benefits of government stimulus. Investors will be looking to understand when the global spread of the virus will slow, and when it will be safe for businesses to reopen.

How is this impacting WealthBar portfolios?

WealthBar portfolios are diversified by design to help you take advantage of growth when the market is up, and minimize losses when the market is down. That’s reflected in our recent performance. 

According to Morningstar data, as of market close on March 31:

  • The S&P/TSX Composite Total Return Index had fallen 17.4% for the month and 20.9% for the year to date, respectively. 
  • Meanwhile, the WealthBar Aggressive ETF portfolio, which has the highest allocation in equities was down 12.0% in March and 15.2% year to date, respectively. 
  • The WealthBar Safety ETF which has the lowest weight in equities was down 6.0% in March and 6.2% year to date, respectively. 

WealthBar’s Private Investment Portfolios, in particular have held relatively steady during the first three months of the year and especially during March. With mandates designed to enhance diversification and mitigate risk by using a larger range of asset classes, these private investments aren’t as exposed to the markets ups and downs. 

Performance*

Here’s how market trends affected WealthBar portfolios in March:

ETF Portfolios


March performance1-Year performance
ETF Safety Portfolio-6.02%-3.13%
ETF Conservative Portfolio-7.73%-4.54%
ETF Balanced Portfolio-10.37%-6.83%
ETF Growth Portfolio-10.96%-7.28%
ETF Aggressive Portfolio-11.95%-8.17%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.

Private Investment Portfolios


March performance1-Year performance
Safety Private Portfolio-3.17%+0.53%
Balanced Private Portfolio-5.15%-0.83%
Aggressive Private Portfolio-7.15%-4.22%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.


*This is a hypothetical illustration of our portfolio performance as of the date noted above. The time-weighted performance is displayed in Canadian dollars and assumes daily rebalancing and the reinvestment of distributions. It is reflective of the model portfolio’s target holdings and weights including portfolio changes. The performance is net of the management expense ratios (MERs); however, does not include WealthBar’s management fee or taxes. Performance is annualized for all periods greater than one year. This performance may differ from clients’ actual account return due to the timing of deposits, withdrawals, buys and sells, and the reinvestment of distributions.

The performance provided is for informational purposes only and is not to be considered as investment advice. Portfolio performance is not guaranteed. The value of your investment can go down, up and change frequently. Past performance is not indicative of future returns. There may be significant differences between the investment portfolios that are not discussed here, including different investment objectives and risk factors. You should always consider, in any investment decision, your investment objectives, needs, circumstances, restrictions, tolerance for risk, financial goals and investment time frame.

Although WealthBar believes the obtained information provided from third-party sources to be reliable, WealthBar does not guarantee the information and disclaims any liability associated with the use of these performance results. Source: Morningstar Direct. For full details of calculation please contact: info@wealthbar.com.

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