Avenue’s fixed income and equity portfolios historically have little turnover of the individual securities from year to year and 2017 has been no exception. However, this year has been notable in terms of big moves in interest rates, the Canadian dollar and many stock market sectors and individual stocks. In this quarter’s letter we would like to discuss where our portfolios stand in relation to these many moves.

The Avenue Bond portfolio is up 1.3% for the first half of 2017 as the expectation of higher inflation and a sell-off in the bond market has not materialized. The Avenue Equity portfolio is up 1.0% for the first half of 2017. While we have not had a market pull back this year, after a good performance in 2016, the type of income producing stocks that Avenue invests in seem stalled as investors’ attention remains on technology and more specifically disruptive technology companies.

In this quarter’s letter, we would like to review Avenue’s bond portfolio strategy and performance. We will then give an update on why Avenue’s equity strategy is well suited to approaching today’s investment uncertainties. We will conclude with our view on current stock market valuation, given this has been the focus of many client questions over the last few weeks.

Politics and subsequent government policy normally affect the level of interest rates, the economy and the stock market gradually, over time. However, the election of Donald Trump as president of the United Sates is a rare exception where market perceptions dramatically changed overnight. In this quarter’s letter, we will discuss what are the most likely US government policy changes and the potential positive impacts on our Avenue Fixed Income and Equity portfolios going into 2017.