Episode 102: Outlook 2025—gearing up for the year ahead

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Kevin Headland

If you're going to Antarctica, please download our podcast. We’ll plant flag in every continent around the world would be amazing.

Macan Nia

Good afternoon and good morning to those joining us from out West.

Macan Nia

Thank you for joining us on our December Market Insights monthly call. My name is Macan Nia, and I'm joined here with my colleague Kevin Headland, where we both share the responsibilities of Chief investment strategist at Manulife Investment Management. For this Market Insight Monthly call, we thought that we would look into 2025. From my investment perspective. There's a lot of questions out there as we enter 2025.

Macan Nia

Will the animal spirits that we saw over the past couple of years, will they continue to re-energize the bulls, or will the bears come out of their hibernation and slash those returns in 2025? There seems to be a sense that there's a lot of uncertainty as we enter 2025. The reality is, is we've been doing this for close to two decades, and the environment is always uncertain.

Macan Nia

As we go into the new year, however, even with the sense that there is a bit more uncertainty, what Kevin and I thought would be prudent to do for our 2025 outlook is to provide different scenarios in terms of how we think the investment and economic landscape could materialize in any given year. What drives the global backdrop? The global economic backdrop, investment backdrop can be monetary policy can be geopolitics, can be politics, and it can also be market expectations.

Macan Nia

So what we've done is we've given three scenarios, and we've applied the odds that we think that this may materialize. For example, we're going to go through a bull case, a bear case and a base case where we think the likelihood of a bull case happening is roughly or successively a bear case happening is 15%, a bull case from happening is 30%.

Macan Nia

And in the base case, in our view, the most likely scenario at 55%. And what we'll do is we'll support each one of these narratives with slides that we think confirm that for you. So let's get started. The first scenario that we envision is the bear case. As you can see, it's the least likely scenario that we think is likely to happen next year.

Macan Nia

So what is the bear case? What is the backdrop in a bear case? Backdrop. One word is the answer. It's stagflation. It's in an environment where global growth slows even more than what it is slowing today. But also inflation is increasing for many reasons, which require central banks that are now across the board. The vast majority of them are cutting rates are forced to pause.

Macan Nia

And in case in this case scenario, increase rates. Now in this environment, as we're looking at here, we're looking at the economic policy uncertainty index. And we're looking at it from two lenses. We're looking at it from the world perspective, which is the green line. And the blue line is the United States. In this environment, the bear case scenario, there's a lot of uncertainty around economic policy, central bank policy.

Macan Nia

And in this type of environment, we expect both of those lines to shoot up dramatically. To the upside. And as we all know, markets do not like uncertainty. And with that increase, elevated levels of uncertainty, this is likely to be the backdrop in the bear case.

Macan Nia

What we're looking at here is a gauge of manufacturing across the world. Allow me to go through it quickly. For those that may be new to it. It's a survey. They survey thousands of managers and manufacturing across each of the countries on the left hand side. The interesting thing about this survey is they tailor the questions to what makes up that economy.

Macan Nia

So clearly, the Canadian economy is very different than the Indonesian economy. They take that into consideration. They ask them ten questions. We're not going to go into the math, but Kevin and I are simple people. Green is good. Yellow is neutral. Red is bad. For our left hand side is November of two years ago. Far right hand side is November of today.

Macan Nia

In a bear case scenario, there seems to be. As we go into 2025, there seems to be in parts of the world that manufacture may be at an inflection point to the upside. In a best case scenario, it starts trending downwards again. So as we move throughout 2025, in a bear case scenario, we're going to see a lot more reds, a lot more deeper reds in market.

Kevin Headland

And you're mentioning the economic backdrop in the manufacturing. We've actually seen some improvements actually in Canada locally, which is actually a positive. This could be a short term impact, but we've seen improvements there. However, as you said in a bear case, we would think we see some reversion lower back to levels we saw earlier this year. Perhaps we get number of sub 45 PMI data.

Kevin Headland

Some 45 tends to indicate recessions. So we see that number. That tends to be the trough where the economic data is illustrating that weaker recession. Here we see Canada the risk of uncertainty around small businesses. We have small business defaults that have increased. Earlier this year we had the end of the, emergency benefit for small businesses.

Kevin Headland

It kind of delayed some of these, bankruptcies. We saw a shoot up of bankruptcies in small businesses. Small businesses tend to be a backbone of economies. They do a lot of hiring for employees, like about restaurants, smaller stores and whatnot. So this could be a risk in the economy going forward if we see a continued elevated level of bankruptcies.

Kevin Headland

We've seen some improvements in the economy recently as well. We had the jobs numbers come out recently, which were better than expected, yet there's still some uncertainty there. We expect the Bank Canada's continued cutting rates. Do they cut rates because the economy is weaker or is it to help alleviate some of the risk of mortgage renewals that are coming up over the next couple of years, which would hurt discretionary spending?

Kevin Headland

So all here, we would expect that the economic data Landscaping Canada would weaken further, perhaps then leading to recession, which would create, of course, market volatility for much of our Canadian investments. We're look more to the South, the U.S. of course, we know that the US market has done extraordinarily well over the last two years, much of it to PE expansion or price earnings ratio expansion.

Kevin Headland

Earnings have been doing better, but we would see them priced for perfection where expectations for the by FactSet is that we would have 15% earnings growth on the S&P 500 broad based market cap weighted index for 2025. That seems a little lofty in our expectations. If we get any type of pullback or resetting of those expectations lower, or if companies don't hit those expectations, we could see a bit of draw down in the markets.

Kevin Headland

This is where the market is a little ahead of earnings, and this is where we could see some risk. The downside. So we've being paying a lot of attention to our earnings expectations guidance, earnings announcements. Those companies that are hitting their targets or exceeding their targets tend to be rewarded. Those even hitting their targets, but have lower guidance tend to be punished.

Kevin Headland

And I think it's important right now looking at individual security selection, this is a risk. If we see broad based, missing of targets, we could see some downside, returns and a bit more volatility in the marketplace. And this is where our base, our bear case really plays out, where everything is price perfection and we don't get perfection.

Kevin Headland

We could see some downside risk.

Macan Nia

And look no further Cav than Nvidia. It's a perfect example where the most recent earnings, they came out with a phenomenal earnings. And the stock sold off 2% after hours. Why? Well, they had doubled their revenues from the prior year over year. But not to the extent that the markets wanted. So price for perfection. And especially when you look at the the Mega-cap names their price for perfection just a little.

Macan Nia

And you don't even need negative news, you just need not as good as news. And markets can sell off, or those stocks can sell off as an example.

Kevin Headland

And that's what happens with expectations. Because expectations get ahead of themselves. And as you do better, you expect them to continue even doing even better and sometimes hard to continue to, outperform expectations going forward.

Macan Nia

So although this is an AR, we think it's a low probability event in the event that this materializes, how do investors make money?

Kevin Headland

I think it's really about balance approach. I think we want to be trimming our winners reallocate to more quality businesses, companies that have more predictable, sustainable earnings growth, cash flow, that, you know, tangible amount of money coming in, perhaps lower expectations as well. Of course, going into fixed income core fixing remains a great opportunity, in this environment.

Kevin Headland

And we don't maybe you want to increase your cash rate. If things were really bad. But I think a bounce approach, could help, alleviate some of the downside risk, and quality investments as well.

Macan Nia

And this may not necessarily be what to like, what to buy, but also to look at and what to not hold as much. So in this type of environment, we know that high yield has done extremely well over the past couple of years. But in this bear case scenario, one would expect spreads to blow out. So you're getting your 8 to 9% coupon.

Macan Nia

You are giving all of it back in price appreciation. So it's not only what you should be buying, but also looking at your own portfolio. If you believe the bear case is likely to materialize and maybe not holding as much higher, or maybe not holding as much as cyclical type of equities i.e. tech, but that's the environment for bear low probability event at 15%.

Macan Nia

But something we're very mindful of.

Kevin Headland

Now let's move on to the bull case. It's a little more exciting. You know things are going great. We are 30% believe that the bull here, this is where momentum begets momentum. We've been following 20 plus percent returns back to back years in 2023 and 2024. Likely. We still have a few weeks to go, but we think we're going to be a above 20% for S&P 500 broad based index returns.

Kevin Headland

This is where momentum continues. Why is it the case things continue to do well we here we look at semiconductor sales now semiconductor sales of course yes it is based on AI and Nvidia. But there's more almost every electronic component has a semiconductor in it. And when there's increased demand for semiconductors, that tends to be a great lead for manufacturing and demand for products.

Kevin Headland

Here we see the blue line is the three month moving average of global semiconductor sales. And the green line here is the MSCI World Index. Trailing 12 month earnings per share. Directionally, they go together. When the blue line goes down, green lengthens the fall. When the blue line goes up, green line tends to rally. We've seen a massive increase in semiconductor sales.

Kevin Headland

If that continues to improve, manufacturing should continue their resurgence. As we saw earlier, above 50 globally seems to be a very good news scenario for both economic growth and earnings growth.

Kevin Headland

Now, of course, we have central banks. Central banks around the world have been moving higher, which has been a great news story we have here. Roughly 50% or so of 65 global central banks are in a rate cut cycle. That is a good news story. Globally. We're an easing monetary policy. And of course that tends to lead manufacturing as we're unwinding or a little less tightening of that kind of, central bank policy that has been good for the economy, kind of stimulates economy.

Kevin Headland

And that's why we want to cut rates. And right now, again, if we continue this path where central banks are cutting rates, we tend to believe the Bank Canada and Federal Reserve and U.S. will continue to cut rates. Then just two of the surge banks globally that are cutting rates. This should also stimulate economic growth and, manufacturing, which again, would cause the markets, the tinu to rally on the path that they've been on recently.

Macan Nia

And one might think that what does a bull case scenario look like? It could be another 20 plus percent year. And what's the odds of that happening? Well, we know too, that actually 20 plus percent returns are not that uncommon in the sense. So when you look back since the 1970s for the S&P 500, a third of those years have seen plus 20 plus or plus 20 plus, plus 20% returns.

Macan Nia

And and what we're looking at here is in a bull case scenario, we're still waiting for the details to come out of China from a stimulus perspective. As of the recording today, over the past couple of weeks, China has come out with stimulus packages, not to the extent that the market is expecting, but at the margin better than what they had going into 2024.

Macan Nia

And in a bull case scenario, investors are anticipating in 2025 that they're going to, you know, unveil more stimulus policy that's going to benefit the consumer instead of going after real estate or things that they've done over the past couple of weeks. What we're looking at here is we're looking at global PMI. That is the green line. And we're looking at the blue line.

Macan Nia

It's the Bloomberg Economic China credit impulse. What does I mean it's just a complicated way of saying credit growth animal spirits. And what we're expecting if the bull case scenario happens is that China will have more tailored stimulus to the end consumer from a consumption perspective, we should see that blue line pick up and as a result, the green line or global manufacturing benefits as a result.

Kevin Headland

Essentially mark an already there's belief that perhaps China hasn't announced as much time as the market wanted to, but the announced right now is supposed to add about 1% of economic growth over the next five years, to the Chinese economy. So again, that should help already. And we're expecting even more stimulus, direct stimulus to happen over the coming weeks and months.

Macan Nia

And then last but not least, is US elections. Now, you may think, what does that matter going into 2025? What we're highlighting here is we've sliced and diced returns for the S&P 500 based on what's the party of the person in, in the Oval Office the first, second year of the first term, you see on the screen here.

Macan Nia

And what we're looking at here in the bull case scenario is when we're looking at first year returns of the first term, they're generally pretty good. So the on average, the first year of a first term of a US president is roughly 12%. Makes a lot of sense to us. Essentially politicians specifically in the US, yes, their term is four years, but they essentially have a year and a half to pump through policy to get approved in Congress and Senate because after two years they have the midterm elections that they have to prepare for.

00;15;19;24 - 00;15;50;19

Macan Nia

So what the markets typically do is they bring forward, as they always do. They look they look into the future, bring in those returns, and you see those returns in the first year of a presidential cycle. It's typically a powerful one for markets. So this would be the backdrop, in the bull case scenario, the US election continues stimulus coming out of China and the U.S. and as an aggregate, the global economy continues to improve without a material increase in inflation.

Macan Nia

And returns are very healthy. In the bull case scenario.

Kevin Headland

It's a year where 12% might not seem as a, you know, a phenomenal, bull case scenario. But when we're looking at, you know, upside returns from their 12% usually even goes higher than that. I 12% just the average. And again, we believe the bull case is that the market continues to rally on the back of the incoming US president.

Macan Nia

So let's transition Kevin to the final one. It's the base case as you can see we've assigned a 55% probability to this event. So we think that this is the most likely to materialize in 2025. What does that look like? It looks like to a scenario similar to 2024, maybe not as much of animal spirits, but very similar to this year.

Macan Nia

And what does that mean? It means a global environment where at the margin economies are slowing, but they're not deteriorating quickly. As a result, inflation expectations are also anchored, leading to central banks or allowing central banks, I should say, to continue cutting. Cutting at the rate that we've seen this year. So in a nutshell, global calm, not too hot from a global economic perspective, calming down inflation or keeping it anchored and allowing central banks to continue cutting.

Macan Nia

And one thing I learned we always joke about this early in my career, I learned, is don't fight the fed or don't fight central banks. So when central banks are cutting, just buckle up your seat belt and go for the positive ride. Now, in a base case scenario, as we've seen, we're looking at you've saw this before as as I explained it, we're looking at it through the service lens here.

Macan Nia

And you see the countries on the left hand side. On the far right hand side, you see a lot of greens, a lot of yellows, a bit of reds, but generally not too hot, not too cold, just kind of right. That's the environment in the base cases we see. And what supports this is a resilient consumer. As we begin as we've cut rates, even consumers that have been resilient find more money in their pockets.

Macan Nia

Now in the base case scenario, financial conditions again are neutral. We are looking here from the Chicago Fed national financial conditions subindex. Another mouthful. This is just basically credit. Is credit available. How how expensive is it if I get even access to credit and a number above the zero line, as you can see on the on the slide shows that credit conditions are tight.

Macan Nia

Below the zero line means that they are easy. Where are we today? On the far right hand side, we're in the median. We're in the middle zone. So if we're above that line, Kevin and I start getting concerned about a risk of a material recession because credit conditions are tight. If they are below that line, we start worrying about, material increases in inflation because money is flowing through the system.

Macan Nia

But where we are today, we're in the middle of the middle of the line where it's not too hot, not too cold, kind of right. And as we look for the Canadian backdrop, again, the base case scenario is okay. What is inflation doing? What we've done here is there's a lot going on here. But ultimately what we did is we're all very focused on the year over year changes in inflation.

Macan Nia

But what we did is we said okay, what's the month over month. And as whatever rates there. So we did a scenario analysis. You see it at the top. You see different month over month, predictions. If they were to unfold and what that would mean for year over year. So in Canada anyways, nearly 50% our time curve since the data our month over month is between basically point 1% to point 2%.

Macan Nia

And you see in this environment, if that were to materialize next year, you're looking at an inflation rate year over year. That is well within what the Bank of Canada is comfortable with. So in the base case, we think that inflation remains anchored. It allows the Bank of Canada, from this context to continue cutting rates, as we can see here, because inflation will be very much within within their target range.

Kevin Headland

Now this is of course core CPI. So we've taken out the you know, higher volatility perspective energy and and food. And the key year, anything month over month less than roughly 0.18 gets us to 2% inflation, which of course is a target. So pay attention a month the month over month. And as long as that remains in that range, we're going to see 2% inflation, which allow the bank to cut rates.

Kevin Headland

Now of course, what does that mean for markets? How do we prepare our portfolios for our base case? Of course this is the the key to our belief is how are we going to position portfolios for 2025. Of course, we believe 2025 is well set up for a great scenario for active management. We have an economy that, as you said, is calling Goldilocks not your whole not too hot, not too cold, just right.

Kevin Headland

We have earnings that are continue to do well. However valuation is key right now. Broad based market valuation is a little bit expensive higher than long term average. But that's broad based that operation. Well here we look at the S&P 500 market cap weighted versus the equal weighted. And we've done is just essentially is divided the two of them.

Kevin Headland

And you get to sorry this is one minus the other one where equate weighted is less than market weighted. Was that mean. That means there's a whole subset of the S&P 500 that is attractively valued. The key is finding it. So it's about find those good businesses that are perhaps less loved and are actually very attractively priced.

Kevin Headland

And that's key right now we believe we like the US, but we want to be more active in terms of where we want to be invested in the US. We're not seeing the magic. Seven is not something we want to hold, but we want to be aware of how much it makes up in our portfolio. And I think that's key right now.

Kevin Headland

The opportunity in the US is midcaps. It also gives us a valuation diversification opportunity here. Mid-caps are cheaper than us. This is a ratio. This is where we take the mid-cap market. Divide by the S&P 500 when it's less than one. Mid-Cap is lower valued than the broad market Sp500. This is very attractive. It's one of the lowest levels in history.

Kevin Headland

Not saying we're going to get a a material, outperformance of mid-caps, but this is where we can diversify our risk in us securities. We want to own U.S, but perhaps want to be more diversified and think mid-cap is great market. You talked about, you know, potential pauses by the incoming Trump administration likely going to be more domestically focused if they give you tax cuts.

Kevin Headland

Give me two, companies that are manufacturing or, committed to improving the US domestic growth, perspective that tends to veer mid-cap securities. They tend to be more domestic focus, less risk of U.S. dollar. Rallying. So we think Midcaps also gives a great diversification and opportunity, given potential policies that will be put in place next year.

Macan Nia

And it's probably going to be pretty similar to assuming that the Trump administration wants to put in place policies that benefit the mastic economy. So I just was thinking about your active management comment. It's up to our managers to go through their companies and see where their method of production is, because those that have domestic production in the US are probably much more likely to benefit from Trump administration policies than those that are 5050.

Macan Nia

So we always talk about what's the importance of active management. What does that mean in this context? It means that they're going through all their companies, see where domestic production is very similar. Back to, you know, Brexit, where our managers were going through their portfolio saying where the means of production was there. But we always talk about what does active manager the importance of it from the context.

Macan Nia

As we go into 2025. It's from this policy perspective. And before we go to the next one, Kev, there's been a lot of discussion in terms of small caps or large caps, and then mid cap had been kind of put to the side of this discussion. And from our point of view, in this base case scenario, we would much rather own make caps than small caps for many reasons.

Macan Nia

As you mentioned, diversification. Generally mid-caps have a better risk return profile in small caps and even large caps. And we've talked about this before. This data point is the Russell 2,040% of these companies are cash flow negative from a or excuse me profitability is negative. If you're at the margins slowing down, these companies are going to be at more risk.

Macan Nia

So we like the, you know, the middle child per se. When you look at the discussion from a risk return perspective and as you've highlighted a diversification perspective.

Kevin Headland

And I think even further, I think small caps perhaps, is that that trade, you know, sometimes they rally strongly during the summer. Mid-caps are much more of a portfolio allocation than a trade. I think that's important there.

Macan Nia

I like how you said that. I would look at mid-caps or large caps as an investment, but when you look at small caps, when you look at M much more of a trade, an n in and out.

Kevin Headland

Now speaking of M looks global. So it's interesting. We've all talked about the Magnificent Seven, the top seven names in the S&P 500, and it was much more of a domination in the S&P 500. However, look at the MSCI Global Index here. It's not just a US phenomenon. Here we have the red line which is the daily return for the MSCI Global Index.

Kevin Headland

And the green bar. Here is the contribution return by the Mag seven. And then the blue is the rest of the index. That is actually a bigger component than the S&P 500. What we're saying here is not only in the US do we need to do active management, but globally. There's a lot of great companies that are outside the US that look very attractive or even inside the US, but it's not about where in the world we want to be.

Kevin Headland

That's it. We're not investing in Europe or M or others, the world. It's about investing in good businesses. You can invest in companies that are domiciled in Europe, for example, that really are focused on m, growth in terms of their, their buying power. You know, the emerging or the emerging middle class in, in emerging markets that are buying these products, but you're buying company based in Europe.

Kevin Headland

So it's interesting to look at specific companies and where they take advantage of and make sure that when you're investing globally right now, look, your portfolios were towards the end of the year, going into 2025, starting to perhaps RSP season. It's a great time to reflect and review your portfolios. There are many global equity funds out there that actually have a large component of Magnificent Seven in them, that you think you might be diversified, but you're not.

Kevin Headland

This is where we want to look at portfolios that perhaps are more diversified and can provide a bit of downside risk or volatility risk if there something goes wrong with those mag seven names. And of course, lastly, bonds. We can't stop talking about bonds. We still believe bonds have a great opportunity in our base case. This is where you get those mid-single digit upper single digit returns, and bonds are back to doing what they're supposed to do protect against volatility.

Kevin Headland

Shocks protect the downside. However, it's important to where we're investing in fixed income. We talk about active management stock picking in equities. But it's important for active management in fixing as well. Widely speaking here we do believe that prices are attractive on the bonds. Here we have the gray bars are the last 14 years of prices on average for us aggregate Canada aggregate, global aggregate, U.S. investor grade and US high yield.

Kevin Headland

Why 14 years seems arbitrary. Not 15, not 20 or 14 tends to exclude the impact of financial crisis, which really, changed the landscape, I think, for both yields and, prices. So we want to take that out to give us a better idea of normal. Environments. Here we have the ten year, five year and current levels, the yellow square, the blue diamond blue triangle, and the red diamond across the board except for high yield.

Kevin Headland

As you mentioned, Morgan, we have prices that are below long term average. This is attractive price mechanisms for bonds, not only are you getting yields but also potential price appreciation. As for the most part bonds are mature at $100. And of course yields are attractive. Here we have the exact same thing, but inverse. Now you have the red diamond above long term average.

Kevin Headland

This is where yields are better than we have been in quite some time. We've talked about nauseum about this in terms of the opportunity exists in just simply clipping the coupon. That's attractive. Now these are averages like the last one is. The idea right now is for our bond managers to find better yields and lower prices. And this is a tracked opportunity for active fixed income.

Kevin Headland

They back to playing what they should be in a portfolio. Can that risk mitigate here. But also providing some income that we can get for our clients in retirement which is very extremely important?

Macan Nia

Okay, before we go, because I think one thing I just realized, we didn't give the, investment for bull case.

Kevin Headland

Right?

So in a bull case scenario, it's essentially what's been working this year. So anything cyclical or added related high yield and even investment grade spreads continue to tighten even more. So you're getting extra price appreciation. You're getting a four round total return. So you're not only getting your coupon, but you still even have room for price appreciation with spreads coming in.

Macan Nia

But but a lot of those cyclical names continue to run in the bull case. In the base case, before you get it, because I know we're going to get questions. Okay. We'd be remiss not to talk about the Trump administration and potential policies. And in our base case or in any one of our cases, there's three major policies that we're very mindful of.

Macan Nia

One is immigration policy, one is tariff policy, and one is corporate tax and regulation policy. In the base case, we think those first two policies are not going to, you know, come to a result of something that is headline driven and structural in nature. There may be week to week headline news, as we've seen with tariff policy with Canada.

Macan Nia

But we think very similar to the Trump administration, the first Trump administration, more headlines, less likely to be structural, where we're focusing on the one we think that's much more likely is corporate tax policy, but also tariffs. And when we talk about corporate tax policy, you talked about, not all these U.S. companies are going to be impacted the same as those with domestic production are much more likely to have better corporate tax rates.

Macan Nia

And also when we think of regulation, when there was a survey just done of CEOs and what when they're asked what they are, you know, optimistic about for next year. It's not it's not corporate tax policy. It's actually deregulation that they're most excited about in terms of cutting red tape. And not being able to let them grow moving forward.

Kevin Headland

And support is when you look at the policies and how they impact the individual companies you mentioned, and that's going to be the key. And I think that's really one of the main reasons we're going to see that uncertainty is we're going to see headlines whether it's geopolitical risk, whether it's, policies put in place, where it's tariffs, where it's trade wars, that uncertainty.

Kevin Headland

The headline risk is really what's going to drive the near-term short term bumpiness, I would say in terms of markets. But if you do see some of these clear signals, we've outlined in our bull, bear and base case, that could actually now be more structural and drive markets. Yes. And we want to keep mindful of these signals to get ahead of the signals and prepare portfolios.

Kevin Headland

Should we see other scenarios unfold. Yeah, that's.

Macan Nia

A great way of saying is we'll get questions. Okay. What makes your bear or your bull stand over your base is, as you said, when it comes to those policies, they're much more structural in nature. That's when you get the bull and the bear, especially the bear. So as a result, we think we think they're more headline driven.

Macan Nia

So the odds of especially the bear case happening is lower.

Kevin Headland

So I, you know, I want to thank you very much for attending this. We're going to talk about how to follow us as well. Mark and I put out a lot of material. We have a very popular Investor's Unplugged podcast out there, just actually recorded 100 episode and our 101 episode. So please tune in to that.

Kevin Headland

We have now 86,000 downloads over the past six, almost seven years of producing this, so very thing for those listening, it's actually been downloading every content we mentioned except Antarctica. So if you're going to Antarctica, please download our podcast. Animal Planet flag in every continent around the world would be amazing. And we have our monthly email. We have our what you need to know email, both English and French.

Kevin Headland

If you're not receiving it, please reach out to your mailing investment management wholesaler. We will get you on that list. It's opt in only, of course, if you ever want to opt out, we have an opt out button as well. So it's kind of a collection of thoughts on monthly basis and links to anything we've put together. So please reach out to your mailing best management wholesaler and get added to that list.

Kevin Headland

We have investors notes on our viewpoints website we just wrote on our outlook. This is actually newly published, so please, if you want to follow along after we've you've listeners recording, go to your or webinar and go to your viewpoints website. And read what we've just posted with lots of great charts. We have our chart book over, I think, 100 charts now, that we've produced over the years.

Kevin Headland

So that's all available in electronic format. So you want your charts, go ahead and reach out again for that.

Macan Nia

And actually, one thing I want to add to the chart book is based on the success of this chart book. The idea of the chart book is that an advisor can use it with their end clients. We've had many advisors over it, and we do lots of client presentations where it's much more behavioral economics focus. And we've had many advisors come up to say, can you make a chart book of this presentation?

Macan Nia

We did. So it's coming out in next year or early 2025. And what it is is a chart book of behavioral economics. And the idea here is we'll have one behavioral economics slide for five emotions. Right. You'll have multiple charts for each emotion. And then we'll have a column at the side that explains the chart. So the idea here is that if market volatility happens which it will you can just hand this to your end client.

Macan Nia

And hopefully it can alleviate some of their concerns.

Kevin Headland

Yes. Some great charts just help you you know, explain your clients what really happens and averages and trying to alleviate some of the concerns. And of course, we all want our clients to invest in because that's the key to achieving their long term goals. And of course, lastly, LinkedIn, we're finding more and more advisors across can are using LinkedIn, for their own practices for getting more clients or even sharing information with their clients.

Kevin Headland

So mark on and I post on a weekly basis, if not more frequently on LinkedIn. It's for you and your clients to use. For information, please reshare repost it. If you're not linked into us or link to us, please connect with us. Reach out. By all means. And if you have any questions, comment on our post.

Kevin Headland

We always like interacting with our clients across Canada. Now of course, Mark, and you mentioned the asset classes, but we want to talk about the funds that we want to support in our base case. And this is where you look at our funds here. Not surprising. Our main life global equity class. This is the fund we want to be investing for our global equity investments, the good core businesses, quality diversification, a great from focus on magnificent seven and large caps.

Kevin Headland

This is where good core businesses will reward you for giving, Manulife more. I'm sorry, man, go back to class, manage by more.

Macan Nia

And I think I'm looking at the one year number. I'm looking at 13%. We talked about, you know, S&P 500, for example, being up 20 plus percent. This goes to the diversification. The reason for that underperformance versus benchmark is the benchmark has a lot of tech. And we all know more with the investment process that you know the tech names they do find it in, but not to up to 35%.

Macan Nia

So when I look at that number, it makes sense to me. It's a great complement for those solutions that I may own or individual securities that are tech focused.

Kevin Headland

And just go into that as well as, we're just starting to, use this new, performance measurement, metric. I would say, five year rolling returns. So it's a great way to actually show the resilience over five year periods or throw it three year periods for portfolio one. Your number just tells you what happened last 12 months.

Macan Nia

As of that date. Yeah.

Kevin Headland

It's all date sensitive. What about the actual, realistic view or, ride your clients on investing that portfolio?

Macan Nia

And I'm really glad that there's we're showing numbers like this because from an economic perspective, for years, we use a lot of rolling numbers, because when we look at the data, we've seen many examples where if you change the end of date by two months, the return profile is materially different. So we we've been using rolling for years now.

Macan Nia

And it's I think it's a really it's a better way to visualize the actual experience by using rolling returns.

Kevin Headland

On our mid-cap side, we're the Matthews Midcap Equity Fund, also managed by mower. A great solution again for diversification on the mid-cap space. Excuse me, our core plus bond fund. On a bond perspective, this is where they're taking advantage of the opportunity and credit, giving you an open landscape in terms of find the best opportunities in fixing them both.

Kevin Headland

In Canada and the US, and of course, our new alternative credit focused, strategies, the Math Alternative Opportunities Fund and Managed Income Plus Fund. Great ways to open the opportunity set for fixed income to achieve your results. So these are great ways to look at, the opportunities for our base case perspective. But there's many more. And that's key for Manulife is is not just a couple solutions.

Kevin Headland

There's a wide range of solutions. So please speak to your management wholesaler about the potential products that might fit your needs in your portfolios. And speaking of the, opportunities we have, mainly from asset management, we are currently now ranked number one amongst the top ten asset managers by assets under management by three, four and five star rated funds.

Kevin Headland

So please reach out to your management to wholesaler to find opportunities that may exist for your portfolios within our fund lineup. Let's I just want to thank everyone who has joined us the entire year for our Market Insights monthly. We look forward to doing more in 2025. If you have ideas about what you'd like to see for these monthly market insights, webinars, please reach out to your wholesaler.

Kevin Headland

We'll be happy to take those, suggestions on advisement. We're always looking to help you and your clients. And given this is in December, we also want to wish you a happy holidays. Happy new year. Take some time to relax, recharge, and get focused for a great 2025. Thank you so much.

Macan Nia

Thank you.

Macan Nia

This podcast is provided as a general source of information and should not be considered personal legal accounting, tax or investment advice orchestrated as an endorsement or recommendation of any entity or security discussed. Investors should seek the advice of professionals prior to implementing any changes to their investment. Certain statements in this podcast are forward looking that are predictive in nature depend upon or refer to future events or conditions.

Macan Nia

Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those set forth. Although the forward looking statements contained herein are based upon what MIM and the portfolio manager believe to be reasonable assumptions, neither MIM nor the portfolio manager can assure that actual results will be consistent with these forward looking statements.

Macan Nia

Certain statements contained in this podcast are based in whole or in part on information provided by third parties, and MIM has taken reasonable steps to ensure the accuracy. Market conditions may change, which mean pack the information contained in this podcast. Commissions, trading commissions, major fees and expenses. All may be associated with mutual fund investments. Please read the prospectus before investing.

Macan Nia

The indicated rates of return are the historical annual compounded total returns. Net of fees and expenses payable by the fund, including changes in security, value and reinvestment of all dividends or distributions, and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security older that would have reduced returns. Mutual funds are not guaranteed.

Macan Nia

Their values change frequently, and past performance may not be repeated