2021 Investment Report
For the year ended March 31, 2021, the Jewish Community Foundation of Montreal’s pooled fund had a net return of 19.2%. The annualized net return for the last five years have been 7.4%.
After the month of April 2020 when risky assets
rebounded, we witnessed during the remainder of JCF’s
fiscal year a strong recovery supported by progress
on a number of vaccines and a gradual relaxation of
the lockdowns. Despite the fact that many industries
operated at limited capacity due to medical restrictions,
the equity markets, supported by sectors such as Health
Care and Information Technology, completely recovered
their losses and hit new heights.
Canadian equities, which were significantly affected
by the pandemic, recovered fully by Q3 2020. The
recovery was driven in large part by the strength within
the Consumer Discretionary, Info Tech and Health
Care sectors. Overall, the S&P/TSX Composite Index
returned 44.3% for the JCF’s fiscal year, mainly due to
the contribution of the allocations to Financials and Info
On a global basis, it was much of the same as the recovery
from COVID-19 was felt across the world.
The MSCI World (Net) Index posted a 36% (CAD) return
during the fiscal year, led by the US market, while the
emerging markets did even better with a 39.9% (CAD)
return of the MSCI Emerging Markets (Net) Index for the
In the last quarter of the fiscal year, optimism on reopening
(combined with policy support) led to increases in rates
which erased the gains generated by the bonds in Q1
2020. However, the credit spreads tightened reaching
their pre-pandemic levels and the Canadian bond market
posted gains for the year, with the FTSE Canada Universe
Bond Index returning 1.6%.
Following a correction lagged by one quarter, the private
market investments rebounded in Q2 2020 led by private
equity and private credit. In the second half of 2020,
the fundraising showed signs of recovery in the buyout
segment of the private equity markets. In the real estate
sector, the fundraising and deal making fell sharply.
Significant changes affected the office, hospitality and
retail sectors. The success of remote work led employers
to downsize their office spaces. The expectations of lower
demands had significant impacts on the valuations and
owners avoided selling at depressed prices.
For the fiscal year, the JCF private equity portfolio
returned 13.9% (USD), global real estate 2.2% (USD)
and timber, agriculture, infrastructure -11.3% (USD).
The heavy exposure to natural resources in the latter
category was the main contributor to its negative
Hedge funds’ performance of 10.6% (CAD) for the fiscal
year lagged that of the equity asset classes. This is
expected given the portfolio’s risk-reducing mandate and
the volatile nature of equity market returns.
Hedge funds were up 2.9% for the fiscal year (USD)
providing very good diversifying performance compared
to equity markets This performance is not necessarily
surprising given the portfolio’s risk-reducing mandate and
the volatile nature of market returns, more specifically at
the start of 2020
Currency and Currency Hedging
The Fund uses a dynamic currency hedging policy approved by the Investment Committee with the aim of mainly reducing negative effects of currency fluctuations while attempting to benefit from positive fluctuations. The hedging of USD exposure is adjusted quarterly in light of the perceived value of the USD/CAD exchange rates vs the purchasing power parity published by the OECD.
Over the fiscal year, the Canadian dollar appreciated by 13.2% against the US dollar. The Canadian dollar appreciation was driven by a combination of US dollar weakness and increasing oil prices during a major part of the fiscal year. In this risk-taking environment, JCF’s flexible currency hedging policy resulted in a positive outcome. The unhedged return would have been 17.5% while the actual portfolio return was 19.2%.
The JCF has a long-term outlook and its investment policy seeks to generate average returns that will support the programs funded by our donors. The investment policy and philosophy are set by the Investment Committee – primarily to invest for the long-term, to use a multi-manager approach, to diversify the portfolio by investing in an array of public and private asset classes including an allocation to hedged investment strategies with the goal of smoothing the Fund’s return volatility over time. The policy targets and actual exposures as of March 31, 2021 were: