At Canada Life Investments, we have long been bearish on a number of the US technology stocks on valuation grounds. Companies such as Alphabet (Google’s parent company), Amazon and Facebook are investor favourites and amongst the largest 10 stocks in the US equity market. However, what has been behind their recent sell-off?
In 2016, we timed the portfolio shifts of the CF Canlife Global Equity and CF Canlife North American funds very well, rotating our overweights into the more value areas of the market as economic indicators – such as the Citigroup Economic Surprise Index – began to suggest that consensus views were too bearish.
The underlying economic environment influences us all on a daily basis, whether we like it or not. Our personal finances are affected by interest rates, job prospects by economic growth and how much we can spend by inflation. The ‘real economy’ therefore has an undeniable impact on the stocks in which we invest. Understanding that impact, and positioning the CF Canlife Global Equity Fund to benefit from changes in the macro outlook, is crucial.