indicatorFund Commentary

Sub Advisor Insights—Markets Q3 2021

Compass sub-advisors discuss the market and analyze the events during the third quarter of 2021.

By ATB Investment Management 15 November 2021 5 min read

Cardinal Capital Management Inc.

Contributed by: Cardinal Capital Management Inc.

The global equity markets ended the quarter off their record highs as volatility resurfaced in September. Mounting fears of a slower than expected economic growth has wavered the recovery sentiment. Issues such as the highly transmissible Delta variant, elevated inflation and supply chain disruptions remain uncertain to when these may improve. China’s Evergrande situation and regulatory upheaval has added another layer of uncertainty.

In Canada, the re-opening of the economy in the third quarter should support a better outlook for economic growth. While the Delta variant poses risk in the fourth quarter, mitigating measures such as vaccine passports should keep the economy on the road to recovery. This stronger economic momentum should flow through 2022.

September was a rough month for stocks as the global concerns (in particular, the China headlines) spooked the financial markets. The S&P/TSX finished the month of September down 2.22% but managed to end the quarter with a small gain of 0.17%. Beneath these headline performance numbers, more damage to stock prices are apparent. Approximately 61% of S&P/TSX companies have fallen into correction territory (down over 10%) and 36% are in bear market territory (down over 20%).


Canso Investment Counsel Ltd.

Contributed by: Canso Investment Counsel Ltd.

At the end of the third quarter, the bond market was jolted by the central bankers signaling that interest rate hikes are drawing closer. Investors dumped government bonds as the U.S. Federal Reserve and Bank of England both indicated a willingness to respond to growing inflationary pressures. At the same time, a surge in energy prices added to investor conviction that the recent jump in inflation will last longer than central bankers previously expected.

Ample evidence suggests that the supply shocks reverberating around the world, combined with outbreaks of the Delta variant of coronavirus, is tempering the recovery in growth. Data is also pointing to a slowdown in Chinese manufacturing as regulatory pressures and high energy prices shut down some production. While the panic over property developer Evergrande Group has ebbed for now, leverage remains elevated at other Chinese real estate companies. In the U.S., employers are rushing to hire people and luring them with higher pay. Despite that, the jobless numbers remain stubbornly high.

In Canada, improving foreign demand and higher commodity prices have brightened the prospects for exports and business investment. Employment has rebounded as lockdown restrictions have eased. However, low-wage workers remain disproportionately affected. The Bank of Canada continues its quantitative easing program by purchasing government bonds and keeping yields low across term.


Cidel Asset Management Inc.

Contributed by: Cidel Asset Management Inc.

The Canadian equity market was essentially flat for the third quarter posting a positive 0.2% return, a pause to the 17.5% year-to-date total return. The positive earnings estimate revisions for the S&P/TSX for the next 12 months of about 7% was entirely offset by the contraction of the forward price-to-earnings multiple from about 15.8x to 15.0x during the quarter. Investors’ confidence in riskier assets diminished during the quarter with rising concerns that a Delta-variant driven ‘fourth-wave’ may impair business activity. Unsurprisingly, the Consumer Staples sector was the best performing sector up 4.6%. While the worst was the Healthcare sector (again) down 19% which consists primarily of cannabis producers. They continue to struggle with profitability. Other notable performances came from within the Energy sector, with natural gas focused Tourmaline up 28%. The Energy sector as a whole was up 2.8%. The rise in natural gas prices (up an astonishing 61% during the quarter) eclipsed the slight increase in oil prices (2%). The technology sector, while down 1.3%, saw a wide range of individual stock returns from Blackberry giving back some of its ‘meme-stock’ driven gains (down 18.6%) to digital payments innovator NUVEI posting a remarkable 43% return. Gold and silver miners struggled during the quarter, despite a flat gold price.


Mawer Investment Management Ltd.

Contributed by: Mawer Investment Management Ltd.

Concerns about slowing growth, supply chain bottlenecks, rising inflation, and the potential for a more accelerated timeline for central bank policy normalization weighed on equity markets globally, particularly late in the quarter.

U.S. equities outperformed most other geographic regions, in part thanks to a strong U.S. dollar. By contrast, emerging markets equities lagged their developed market peers due primarily to weakness in China given a combination of fears regarding imbalances in the property market (e.g., Evergrande) and an intensification in regulatory pressure on a number of Chinese industries and businesses.

  1. The commentary provided herein was written and contributed by Sub-managers to the Compass Portfolios and ATBIS Pools and was compiled by ATB Investment Management Inc. (“ATBIM”). This report is being provided for information purposes only and is not intended to replace or serve as a substitute for professional advice, nor as an offer to sell or a solicitation of an offer to buy any investment. Although the information has been obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is made as to their accuracy or completeness and ATBIM does not undertake to provide updated information should a change occur.

    Any performance data provided for mutual funds assumes reinvestment of distributions only and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that may reduce returns. Mutual Funds are not insured by the Canada Deposit Insurance Corporation, nor guaranteed by ATBIM, ATBSI, ATB Financial, the province of Alberta, any other government or any government agency. Commissions, trailing commissions, management fees, and expenses may all be associated with mutual fund investments. Read the fund offering documents before investing. Unit values of mutual funds will fluctuate and past performance may not be repeated. The Compass Portfolios and ATBIS pools include investments in other mutual funds. Information on these mutual funds, including the prospectus, is available on the internet at

    Index performance does not include the impact of fees, commissions, and expenses that would be payable by investors in investment products that seek to track an index.

    ATBIM and ATB Securities Inc. are wholly owned subsidiaries of ATB Financial and are licensed users of the registered trademark for ATB Wealth. This document may not be reproduced in whole or in part; referred to in any manner whatsoever; nor may the information, opinions, and conclusions contained herein be referred to without the prior written consent of ATBIM. ATB Financial, ATB Investment Management Inc. and ATB Securities Inc. do not accept any liability whatsoever for any losses arising from the use of this document or its contents.

ATB Wealth experts are ready to listen.

Whether you're a beginner or an experienced investor, we can help.

Chat now
ATB Virtual Assistant
The ATB Virtual Assistant doesn't support landscape mode. Please tilt your device vertically to portrait mode.