Sunday, May 26, 2024

The year could be tough for the economy, Fonds FTQ CEO warns

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Maria Gill
Maria Gill
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The worker-backed fund unveils results that take into account declines in the stock and bond markets. (Photo: The Canadian Press)

Fonds de Solidarité FTQ measure was revised down 5.7% to $52.61 Thursday, while the Labor Fund reveals results that take into account declines in the stock and bond markets.

This downturn is explained by a difficult macroeconomic context with a protracted epidemic, a rise in inflation and the outbreak of conflict in Ukraine, as Jenny C. Becky, the IMF’s president and CEO, explained in an interview.

She comments, “It sure was a somewhat special year. We have phenomena that we haven’t seen in 50 years. Of course, our wallet has reacted to that.”

Ms. Becky says she has noticed more tension on the ground as entrepreneurs try to explain the major moves that have rocked the economy in recent months. “Next year will not be easy, but I am very confident in the long term,” she says.

If the next year remains uncertain, the commander insisted on the importance of maintaining a long-term horizon. “It’s hard to predict next year, I think what’s really important is staying on the long-term path, the challenges of society, the climate crisis, the importance of businesses, as a society, making a transitional just environmental policy and a just technology policy transition.”

She sees a one-year return, down 1.1%, as a better indicator than a six-month return. It notes that private investments, unlisted companies, generated an annual return of 9.1% in the fiscal year ending May 31.

This good performance offset the general decline in the stock and bonds stocks. As of May 31, the FTSE Canada Universe Bond Index is down 8.55% over the past year. During the same period, the Morning Star National Bank Quebec index, which contains large capital in Quebec, lost 6.6%.

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Over a longer period, the fund’s compound annual return is 6.2% over 3 years, 6.8% over 5 years and 7.1% over 10 years, excluding tax credit.

During the year, Becky said, the fund reduced its exposure to bonds, which underperformed when interest rates rose, and replaced them with corporate loans.

She adds that for the “mission” strategy of investing in Quebec companies, the fund will adapt to the needs of Quebec companies. The fund states that it has invested $1.4 billion in Quebec’s economy, the fifth year in a row that this number has crossed the $1 billion threshold.

“When I look at regional funds, 40% of the transactions we had were to maintain head offices in Quebec, as an example. So, we really go there to cater to businesses.”

The fund added 24,000 new contributors-savers during the year, bringing their number to 748,371, and net assets increased by $0.2 billion to $17.4 billion. Fund management fee is 1.6% for the year.

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