The year 2022 was particularly difficult for financial markets: inflation continued to rise despite multiple interventions by central banks, which significantly raised interest rates in an attempt to slow inflationary pressures and mounting geopolitical tensions. In this exceptional context, few asset classes have experienced positive growth, and the first quarter was marked by significant corrections in the stock and bond markets.
The iA PAR participating account fell by close to 11% while only private equities recorded a positive return of about 9%. This particular asset class played its role to diversify and generate returns and we took advantage of opportunities in order to make additional private debt and equity investments at attractive entry rates. The corporate bonds team optimized its selection of corporate bonds by making adjustments that took risk, return and liquidity into consideration. We also rebalanced our common stock portfolio by privileging Canadian equities in order to limit our exposure to market volatility. In fact, inflationary pressures are supporting commodity prices, which account for a significant portion of the Canadian stock market index.
Finally, we took advantage of changes in the interest rate by making strategic transactions to adjust the duration of government bonds. For 2023, we will continue to privilege excellent quality investments, and we will remain vigilant regarding the portfolio’s overall exposure to duration.
Our expectations for portfolio growth continue to be incredibly positive and our teams of analysts are preparing for the increasing demand in investments requiring specialized expertise.
