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Cougar Global Investments
Trade Log
Asset Allocation Changes – Effective April 16, 2015
Each month, we move our one-year forecast horizon forward one month. The MES has not changed since February.
Despite the slow start to the year, we still expect GDP growth to be around 3% for most of the forecast horizon. Much of the
slowdown in Q1 reflected the temporary drag from the coldest winter on record in the Northeast and from the dockworkers’
strike in Los Angeles. Soft global demand and the appreciating $U.S. are taking their toll on the manufacturing sector. But in
a relatively closed service-based economy like the U.S., a muted performance from manufacturing should not prevent the
wider economy from growing above trend. The 80% of the economy that is not manufacturing should continue to grow above
trend. Meanwhile, the priority for households has been to use the windfall from lower energy prices to pay down credit card
debt and to increase savings. Stronger job growth, rising incomes, wage increases, and lower gasoline prices are all factors
that will, in time, prompt consumers to spend, particularly on new vehicles. Consumer confidence (apart from January’s
reading) is at its highest level since 2007, and well above the long-term average. The housing recovery should re-accelerate
due to improving job prospects, falling home vacancy rates, and continued low mortgage rates. There remains a possibility
that the collapse of oil prices and the resulting pull back in oil patch capex will cause GDP growth to pause in Q4
(Stagnation 8%) before rebounding in 2016 (Growth 86%). There is considerable uncertainty regarding the timing of the
Fed’s lift-off. Although September now looks most likely, June remains a possibility, as does the possibility that the datadependent Fed might wait until 2016. Everything depends on the labor markets. So far, there is no data in either of the Fed’s
twin mandates to support jobs and control inflation that would force the Fed to act. There have been no new black swans.
There remains a considerable difference of opinion in our research re: the probability of a “Grexit” from the eurozone and its
contagion effect (Chaos 6%). The strong dollar environment is going to continue to hurt exports and favor corporations
whose revenues are domestic and/or who are large importers of goods in 2015. Accordingly, we further reduced exposure to
the multinational S&P 500 in favor of the U.S. mid- and small-caps. Lower world oil prices should provide support to the netenergy importing countries like Europe, Japan, India, South Korea, and China. Europe will also continue to benefit from the
weak euro and the ECB’s quantitative easing program. We have added both Asian and hedged Japanese equities to the MAR
6 and MAR 8 mandates, and eurozone equities to the MAR 8. We reduced weights in mortgage-backed securities to
accommodate these changes. Although the mean expected returns of all mandates has risen due to these changes, we are
nowhere near using up the entire risk budget for any of the mandates.
Dr. James Breech,
April 17, 2015
MAR 6
ASSET CLASS
MAR 8
MAR 10
MAR 12
Symbol
Current
Month
Previous
Month
Current
Month
Previous
Month
Current
Month
Previous
Month
Current
Month
Previous
Month
S&P 500
SPY
S&P 400
MDY
S&P 600
IJR
10.00
25.00
0.00
0.00
5.00
5.00
0.00
45.00
10.00
20.00
0.00
0.00
0.00
0.00
0.00
30.00
25.00
48.00
5.00
0.00
5.00
5.00
5.00
93.00
30.00
48.00
5.00
0.00
0.00
0.00
0.00
83.00
20.00
48.00
10.00
0.00
5.00
5.00
5.00
93.00
25.00
48.00
5.00
0.00
5.00
5.00
5.00
93.00
10.00
48.00
20.00
0.00
5.00
5.00
5.00
93.00
20.00
48.00
10.00
0.00
5.00
5.00
5.00
93.00
45.00
60.00
0.00
10.00
0.00
0.00
0.00
0.00
45.00
60.00
0.00
10.00
0.00
0.00
0.00
0.00
5.00
5.00
5.00
5.00
5.00
2.00
5.00
2.00
5.00
2.00
5.00
2.00
5.00
2.00
5.00
2.00
Mexico
EWW
Asian Equities
AAXJ
Japan Currency Hedged
HEWJ
Eurozone
TOTAL EQUITIES
Barclays Capital US
Mortgage-Backed Securities
EZU
MBB
TOTAL FIXED INCOME
GOLD
IAU
CASH
CASH
For Financial Advisor and Current Client Use Only
See over for important disclosures.
Cougar Global Investments 357 Bay Street, Suite 1001, Toronto, ON M5H 2T7 1-800-387-3779 [email protected]
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IMPORTANT DISCLOSURES
Cougar Global Investments Limited (Cougar Global) is an investment manager that utilizes tactical asset allocation to
construct globally diversified portfolios. Cougar Global is an independent investment management firm not affiliated with
any parent organization. Cougar Global is registered with the Ontario Securities Commission and is an independent, nonresident registered investment adviser with the Securities and Exchange Commission. Prior to 01/02/2013, the firm was
named Cougar Global Investments LP.
Principal Risk: An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust,
involves the risk of losing money and should be considered as part of an overall program, not a complete investment
program. An investment in ETFs involves additional risks: non diversified, the risks of price volatility, competitive industry
pressure, international political and economic developments, possible trading halts, and index tracking error.
International and emerging market investing involves special risks such as currency fluctuation and political instability and
may not be suitable for all investors.
Stock investing involves risk, including the risk of loss
High Yield/Junk Bonds are not investment grade securities, involve substantial risks and generally should be part of the
diversified portfolio of sophisticated investors.
Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to
market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield,
maturity and redemption features.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise
and are subject to availability and change in price.
Mortgage-Backed Securities are subject to credit, default risk, prepayment risk that acts much like call risk when you get
your principal back sooner than the stated maturity, extensions risk, the opposite of prepayment risk, and interest rate risk.
Government bonds and Treasury bills are guaranteed by the U.S. Government as to the timely payment of principal and
interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
Asset allocation does not ensure a profit or protect against loss.
The fund’s concentrated holding will subject it to greater volatility than a fund that invests more broadly.
The fast price swings of commodities will result in significant volatility in an investor’s holdings.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell
Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
The prices of small and mid-cap stocks are generally more volatile than large cap stocks.
Precious metal investing is subject to substantial fluctuation and potential for loss.
This research material has been prepared by Cougar Global Investments.
For Financial Advisor and Current Client Use Only
Cougar Global Investments 357 Bay Street, Suite 1001, Toronto, ON M5H 2T7 1-800-387-3779 [email protected]
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