May the 753,125 shareholders of the FTQ Solidarity Fund and the 209,500 shareholders of the CSN Fondaction rest easy. The two popular employee-sponsored funds were due to end the most recent fiscal year (Janum June 2022 to May 31, 2023) in positive territory.
The new price of each share of each of the two employee-sponsored funds, to be announced shortly, should indeed be revised upwards compared to the price recorded a year ago on May 31, 2022, which was down. I remind you that in the current 2022 financial year, the action of the Fonds de solidarité FTQ has decreased by 1.1% and that of the Fondaction CSN by 2.8%.
However, barring a major surprise, the stock price gain for the year ended May 31 is likely to be modest, a few percentage points at most.
In any case, it would be considered a good performance for the stock to rise even slightly when it does.
For what ? Canadian stock market indices fell in the 12 months ended May 31.
benchmarks
The Toronto Stock Exchange’s barometer, the S&P/TSX Composite Dividend Yield, fell 2.5%. In contrast, total returns for the 60 large Canadian companies that make up the S&P/TSX 60 fell 2.9%.
Things were even worse for the Canadian small-cap index “S&P/TSX Smallcap,” which lost 9.3% over the same period from June 1, 2022 to May 31, 2023. Even more dramatically, the S&P/TSX Venture Composite index, which represents very small Canadian public companies, was deflated by 16.3%. In terms of the proportion of bond investments, the two benchmark indices posted very slight gains: the FTSE Canada Universe Bonds Index was up 0.9% and the FTSE Canada Long-Term Bonds Index was up just under 0.2%.
Let’s be optimistic
What makes me think the FTQ and Fondaction fund will outperform the Canadian benchmark financial indices?
First, it should be noted that the typical Quebec indices, the Quebec 30 Index (IQ-30) and the Quebec 120 Index (IQ-120), have significantly outperformed the Toronto Stock Exchange indices.
The yield (including dividends) for the 30 large Quebec companies listed on the IQ-30 exchange was 6.8% for the 12 months ended May 31. And during that time, the 120 Quebec companies in the IQ-120 index rose 2.5%, not to mention the positive impact of dividends. Another factor that could work in favor of the two employee-sponsored funds?
Their heavy concentration of more than 50% in private securities and specialty funds usually helps them when the stock markets get into trouble.
