The City of Moose Jaw’s investment portfolios generated nearly $4 million in interest during the fourth quarter of 2021, while they have generated over $11.5 million for the entire year.
During city council’s Feb. 14 regular meeting, council received the investment committee’s report with official results from the fourth quarter of 2021; an interim Q4 report was presented in mid-December. Council then voted unanimously to receive and file the document.
There was $83,929,536.36 in the long-term portfolio and $30,245,558.98 in the moderate-term portfolio as of Dec. 31, 2021, for a total of $114,175,095.34. In comparison, as of Sept. 30, those figures were $80,672,873.06, $29,505,150.03 and $110,178,023.09, respectively.
Long-term portfolio
From Oct. 1 to Dec. 31, the long-term portfolio increased by 4.04 per cent and generated $3,256,663.20. This increased the portfolio to $83,929,536.26 from $80,672,873.06.
For 2021, this portfolio generated a total of $9,210,408.59 in interest and increased overall by 12.18 per cent. In comparison, the percentage increase in 2020 was 9.92 per cent, and in 2019 was 3.51 per cent.
Since 2019, this portfolio has returned $18,324,080.34 in total interest.
Moderate-term portfolio
From Oct. 1 to Dec. 31, the moderate-term portfolio increased by 2.51 per cent and generated $740,408.95. This increased the portfolio to $30,245,558.98 from $29,505,150.03.
For 2021, this portfolio generated a total of $2,313,909.45 in in interest and increased overall by 7.87 per cent. In comparison, the percentage increase in 2020 was 6.46 per cent, and in 2019 it was 2.31 per cent.
Since 2019, this portfolio has returned $4,928,358.25 in total interest.
Combined, the portfolios generated $3,997,072.15 in interest during the fourth quarter of 2021, while both have returned $23,252,438.59 since they were created in 2019.
Total investment earnings last year were $11,524,318.04.
“The city’s investment funds are a key pillar of the City of Moose Jaw’s ability to fund a variety of the city’s programs and services on an ongoing basis, thus relieving this large burden from the taxpayer,” said Coun. Dawn Luhning. “The 2021 earnings equate to a 37.08 percentage increase in taxation.”
Future outlook
A new coronavirus variant, high inflation, supply chain challenges and China’s property market slowdown are the main headwinds facing the global economy, portfolio manager RBC said in its global investment outlook report.
Yet, policymakers acknowledge that the economic recovery is well advanced, allowing for gradual dialling back of monetary accommodation and less generous fiscal support, the report continued.
“The recovery is still in good shape and we expect growth to persist in 2022, albeit at a slower pace relative to 2021,” noted the report.
Meanwhile, inflation increased during the fourth quarter and stood at “extraordinary levels not encountered in decades.” Economic demand has snapped back faster than supply, causing higher commodity prices, insufficient staffing levels and shortages in goods. While supply chain constraints may fade and oil prices come down, other pressures could persist or intensify.
“Shifting to the longer term, however, we continue to believe that high inflation is cyclical rather than structural,” the report said. “After distortions from the pandemic settle, we should eventually see a return to normal inflation readings.”
Foreign exchange markets are facing volatility again, mainly due to the omicron variant and the divergence of central bank monetary policies, the report continued. The U.S. dollar has benefited from market expectations that interest rates will rise next year while optimism grows for cyclical currencies such as the Canadian dollar.
The report added that sovereign bond yields remain unsustainably low while stocks are fully valued, which means profit growth will be critical to sustaining the current bull market.
