February In Review: Outlooks from the 2018 Mauldin Strategic Investment Conference


By Rob Edel, CFA

Highlights This Month

Read the monthly commentary in PDF format.

The Nicola Wealth Management Portfolio

Returns for the NWM Core Portfolio Fund were up 0.4% in the month of February. The NWM Core Portfolio Fund is managed using similar weights as our model portfolio and is comprised entirely of NWM Pooled Funds and Limited Partnerships. Actual client returns will vary depending on specific client situations and asset mixes.

Canadian and U.S. bond yields moved in opposite directions last month, with the Canadian yield curve experiencing a parallel shift down of about five basis points, while the U.S. curve shifted upwards and steepened. The impact on returns for the NWM Bond Fund was muted and flat in February.

NWM High Yield Bond Fund gained 1.5% in February, compared to the Bank of America Merrill Lynch U.S. High Yield Index which was -0.9%. It was a volatile month for the high yield market which was down almost two percent early in the month before partially recovering. Apollo Credit Strategies and Picton Mahoney Income Opportunities each produced gains in February. The NWM High Yield Bond Fund also benefited from a strong 4.2% U.S. dollar appreciation against the Canadian dollar.

The weaker Canadian dollar positively impacted the NWM Global Bond Fund, which was up 3.0% in February.

Our mortgage pools continued to deliver consistent returns, with the NWM Primary Mortgage Fund and the NWM Balanced Mortgage Fund both returning +0.4% last month. Current yields, which are what the funds would return if all mortgages presently in the fund were held to maturity and all interest and principal were repaid and in no way is a predictor of future performance, are 4.4% for the NWM Primary Mortgage Fund and 5.3% for the NWM Balanced Mortgage Fund. The NWM Primary Mortgage Fund ended the month with a cash of $3.8 million, or 2.32%. The NWM Balanced Mortgage Fund ended the month with $68.1 million in cash or 13.9%.

The NWM Preferred Share Fund returned -1.5% for the month while the BMO Laddered Preferred Share Index ETF returned -0.9%. The underperformance for the month was caused by three factors: the sector diversification in the portfolio, structure bias, and company-specific events. The preferred market is dominated by financials and energy with 64% and 21% respectively. Our fund has a 50% weight in financials and a 27% weight in energy (predominately Enbridge and Transcanada). In an effort to diversify by industry there is a tilt towards credit.

The structure bias is due to an underweight in the high rate reset preferred shares. These preferred shares trade with a higher probability of being redeemed and generally trade closer to par, resulting in lower volatility but also lower returns. Given our view that preferred shares are still undervalued versus corporate bonds, a larger discount to par provides a larger potential for capital gains. The weighted average price for the NWM Preferred Share Fund is $22.49 while the ETF weighted average price is $23.75. The company-specific event was Element Fleet Management failing to find a strategic buyer, losing a major client, and having their CEO depart. As a result, the stock plunged 40% while preferred shares sold off 20%. Short-term there are concerns around further customer losses and goodwill write-downs; however, the name has strong free cash flow and now trades at a significant discount to book value and only a slight premium to tangible book.

Canadian equities were weaker in February, with S&P/TSX -3.0% (total return, including dividends). The NWM Canadian Equity Income Fund returned -3.1% in February. We added Nutrien, Canwel Building Materials, and Pinnacle Renewable Holdings to the portfolio. We sold our position in Morneau Shepell, Arc Resources, and Stantec. Top contributors to performance were Air Canada, Heroux-Devtek, and Winpak. Detractors were Element Fleet Management, Whitecap Resources, and Uni-Select. Looking at the sectors, we benefited from our materials and energy underweights. Consumer discretionary and financials were large drags last month.

The NWM Canadian Tactical High Income Fund returned -0.8% in February, which was a solid result relative to the S&P/TSX’s -3.0% return. Similar to January, 9 out of 11 S&P/TSX sectors were in negative territory with only info tech and industrials having positive returns (the NWM Canadian Tactical High Income Fund has exposure to info tech). Market volatility roared back to life increasing 66% in the first nine trading days, which the fund took advantage of by writing options on a typically low-volume name (Bank of Nova Scotia). We believe that the market will be volatile over the next few months; hence, we will be selective in writing put options on high-quality companies with low financial leverage.

Foreign equities were weaker last month, though when translated back into Canadian dollars, the losses were tempered, with the NWM Global Equity Fund -0.6% vs -0.4% for the MSCI ACWI (all in CDN$). Positive returns in the U.S. helped U.S.-weighted Edgepoint while weakness in emerging markets weighed on performance for C Worldwide (through its position in HDFC, an Indian company) and BMO Asian Growth & Income. Softer European markets impacted Europe-oriented Valueinvest and our new internal Europe Australasia & Far East (EAFE) quantitative investments. Performance from our managers in descending order: Edgepoint: -0.2%, Lazard Global Small Cap Equity: -0.3%, BMO Asian Growth & Income: -0.3%, ValueInvest: -0.6%, NWM internal EAFE quantitative investments: -0.6%, and C Worldwide: -1.2%.

The NWM U.S. Equity Income Fund declined 4.1% in U.S. dollar terms in January versus a 3.7% decrease in the S&P 500 (all in U.S. dollar terms). Gains in Adobe and Estee Lauder, and not owning Exxon Mobil were more than offset by headwinds from owning Walmart and Comcast and not owning Amazon.com. During the first week of February when the equity markets were soft, the NWM U.S. Equity Income Fund outperformed the S&P500; however, as the broader market gained during the rest of February, the portfolio has lagged due to stock selection. Walmart’s stock price was hurt as digital sales during Q4 weren’t as strong as the market expected and Comcast’s stock was down as the market didn’t agree with its bid for Sky, a UK-based pay-tv operator. As for changes in the portfolio, we sold Blackstone and trimmed U.S. Bancorp and used the proceeds to add to our other bank positions including M&T Bank, JP Morgan, Bank of America, and Citibank.

The NWM U.S. Tactical High Income Fund’s performance was -1.0% during the month versus the S&P 500’s -3.8% return.  This outperformance was due to low equity-equivalent exposure (~21% beginning of the month) and being underweight in the worst performing sectors (Energy, Consumer Staples, Telecom and Real Estate). Market volatility spiked up nearly 47% in February. The NWM U.S. Tactical High Income Fund took advantage of this volatility early in the month by writing more put options on high-quality names (Union Pacific, American Express, and M&T Bank). The Fund continues to focus on downside mitigation and has been writing put options approximately 10% out-of-the-money on low financially-levered names.

In real estate, NWM Real Estate Fund was up 1.0% in February versus a 0.9% decline for the iShares REIT Index. We report our internal hard asset real estate limited partnerships in this report with a one month lag. As of January 31st, January performance for SPIRE Real Estate LP was +0.3%, SPIRE U.S. LP +0.5% (in U.S. dollars), and SPIRE Value Add LP +1.2%.

The NWM Alternative Strategies Fund was up +1.5 in February (these are estimates and can’t be confirmed until later in the month) with Winton Diversified Opportunities Fund-2.6%, and Millennium Trust +5.2%. Of our other alternative managers, RP Debt Opportunities and Polar Multi-Strategy Fund were both down 0.3%, while RBC Multi-Strategy Alpha Fund declined 1.3%. We have added two new managers, Apollo Offshore Credit Strategies Fund Ltd., which was +4.4% last month, and Verition International Multi-Strategy Fund Ltd., which was +4.0%. Winton, Millenium, Apollo, and Verition are based in U.S. dollars so were positively impacted by the weak Canadian dollar last month. Precious metals stocks were weaker last month with the NWM Precious Metals Fund -4.5% while gold bullion gained 1.2% in Canadian dollar terms.

February In Review

For the first time in two years, U.S. stocks suffered a correction, defined as a drop of over 10% from the previous market top, but just barely. From January 26th to the close of trading on February 8th, the S&P 500 fell 10.2%. The technology-heavy NASDAQ Index fared better, as did the S&P/TSX and global stocks in general. All declined, but less than 10%, so far anyway.

The MSCI AC World Index fell only fell 9%, and actually recouped 5.5% of this decline before the end of the month but still broke a record 15-month winning streak by finishing the month in the red. It’s common for stocks to suffer a correction during the year, with the MSCI AC World Index averaging a 15% pullback each year since 1980.  2017 was perhaps the exception with stocks suffering only a 2% pullback.

While most markets ended the month well off their lows because stocks have yet to exceed their January 26th highs, it’s premature to conclude the correction has run its course. According to Strategas, since 1989 an average bull market correction has lasted 2.4 months and has taken the market down just over 14% before more than recouping these losses over the ensuing three months. If we have indeed seen the lows, this correction has been very mild indeed.  On the other hand, despite the recovery at the end of the month, if the market continues to decline in March such that it falls more than 20% from the January 26th high, it will have officially be classified as a bear market in which corrections have historically has lasted longer, produced larger losses, and not recovered as quickly.

Bull market correction or bear market? While it’s never a good time to suffer a market correction, the timing of last month’s pullback is fortuitous in the sense that it took place right before our annual pilgrimage to John Mauldin’s annual strategic investment conference, always a good source for market insights and commentary on the future direction of the economy. In combination with our own views on what’s impacting markets, we plan to recap some of the presentations we saw at the conference in this month’s commentary while drawing some conclusions on whether the bear market is about to awaken from hibernation or if the bull will trick markets once more and continue to take stocks higher.

Higher bond yields are largely responsible for the increased volatility in the market last month. In our opinion, the reason rates are moving higher will determine whether their recent move upwards is the start of a bear market or a buying opportunity in the extended bull market.

Higher interest rates are a good thing if they are moving higher due to a strengthening economy. Too much of a good thing can turn bad, however.  Strategas’ Jason DeSena Trennert recently pointed out that the S&P 500 has historically delivered higher returns when 10-year bond yields were rising rather than falling. Credit Suisse believes, based on recent trading data, stocks should react positively to higher yields until 10-year yields hit 3.5%. Goldman Sachs believes the 10-year will end 2018 at only 3.25% but recently warned clients their “stress test” indicates a move to 4.5% could result in a 20 to 25% decline for stocks.

While inflation has consistently fallen below the Federal Reserve’s 2% target since the financial crisis, recent data has increased market expectations that prices might once again start moving higher. At the very least, fears of deflation have been largely discounted. If the Federal Reserve believes the economy is starting to heat up, the market will start to discount tighter monetary policy and even higher bond yields.

Interestingly, economic growth, both in the U.S. and globally, has actually started to weaken at the margin. After a surprising swing to the upside in the second half of 2017, forecasters have been less impressed with the early result in 2018. Inflation in February eased from the previous month and while employment growth was higher than expected, wage growth decelerated and January’s growth rate was revised lower. The not too hot, not too cold (Goldilocks) economy remains largely in place, despite the concerns being expressed by the bond market.

Also concerning markets later in the month and into early March was fears of a trade war. With President Trump threatening a 25% tariff on steel imports and 10% on aluminum, retaliation from America’s trading partners could start a global trade war. This would hurt not only earnings in specific industries but likely lower overall economic growth. President Trump’s tariff moves might just be negotiating tactic to gain more favorable trading terms from America’s partners. Canada actually exports more steel and aluminum to the U.S. than China; who, most believe, is Trump’s ultimate target. The tariff announcement might be a strategy to coerce Canada and Mexico to accept more favorable terms for NAFTA which would then be used as a yardstick for subsequent trade deals. However, if Trump miscalculates, he could throw the economy into recession and stocks into a bear market.

So what do the presenters at the Strategic Investment Conference believe? Well first, a warning. Presenters at John Mauldin’s conference have historically been a bit on the bearish side.  We like that, however, as it tends to balance the typically bullish rhetoric from Wall Street and the general media. It was interesting, however, that despite coming off a year where stocks were up over 20% (S&P 500 + 21.8% total return in U.S. dollar terms) and economic growth appears to have finally gained its footing, only two presenters shared any bullish comments or forecasts with the crowd (and one of them was really only in passing).

Stanford Professor and author Niall Fergusson made the somewhat comforting comment that “not everything in America is a disaster, alluding to the economy, recent geopolitical events in North Korea (a possible meeting between Trump and Kim Jong-un), and the Middle East; while Stephen Moore of the Heritage Foundation was outright bullish on America and particularly bullish on tax reform and its impact on the U.S. economy. In full disclosure, however, Mr. Moore shared with the audience that he had helped draft the tax package so perhaps he is a little biased. Two people, that’s it. The rest ranged from moderately indifferent to out-right bearish.

One of the more prevalent themes at this year’s conference was that we are coming up to a paradigm shift, in either the economy, society in general, or both. From an economic perspective, the end of the business cycle and the risk of a coming recession was a theme discussed by several speakers.

Gluskin Sheff’s David Rosenberg kicked off the conference by divulging to the audience that his firm was starting to take risk out of their client portfolios by raising cash levels to 25%. Mr. Rosenberg believes the regime change at the Federal Reserve (Jay Powell took over as Fed Chairman in early February) will result in interest rates moving higher as well as a tighter monetary policy which has historically ended in either a soft landing or a recession; he expects this to happen next year. With valuations and corporate debt levels both high, Rosenberg isn’t waiting around and is becoming more defensive right now.

High valuations were also a theme picked up by Steve Blumenthal, CIO of Capital Management Group, and bond king Jeffrey Gundlach, who is CEO of Doubleline Capital. Mr. Blumenthal used a number of valuation indicators to highlight how current investment performance starting from present valuations has historically delivered either negative returns or (at best) low single-digit gains. More optimistically (I guess), Blumenthal highlighted that a correction in valuations would present investors with outstanding future opportunities on the other side of the inevitable reset. He warns that investors should be mentally prepared to take advantage when it happens. In the interim, like David Rosenberg, Blumenthal is defensively positioned.

Jeffery Gundlach also highlighted high valuations, and like Rosenberg, believes higher interest rates will result towards the end of the current business cycle; he just doesn’t see it right now. Being a bond trader, Mr. Gundlach tends to take a shorter-term look at the economy and highlighted a number of indicators that have historically foreshadowed a recession. With the exception of money supply, none of Gundlach’s indicators point towards recession, at least not in the next six months.

While Jeffery Gundlach reviewed a number of recession indicators, Hoisington Investment Management’s Lacy Hunt concentrated on just one, the lone indicators Gundlach conceded could be indicating a recession is close. Lacy Hunt is a conference favorite with presentations full of economic facts only an economics graduate student could understand. He has also been one of the more consistent forecasters over the years, predicting yields will remain low and thus preferring to be invested in long-term Treasuries. The theme of Mr. Hunt’s presentation was the law of diminishing returns. Higher and higher debt levels have provided slower and slower economic growth, a trend that looks to continue. Hunt sees the higher GDP growth back in Q4 2017 as a one-off event and points to declining money supply and bank credit as indicators that slower future growth is likely. He believes that recent wage increases will not stick in this environment and inflation will remain benign. Monetary tightening will only serve to reduce money supply growth in 2018 and higher short-term interest rates will lead to lower longer-term rates and a flattening yield curve.

Grant Williams, author of the financial publication, “Things That Make You Go Hmmmm…”, also discussed components of the above speaker’s arguments.  He shares Lacy Hunt’s concerns with the declining utility of debt, while also agreeing with David Rosenberg’s thoughts on a regime change at the Federal Reserve and how higher interest rates will impact investment returns. Williams believes inflation is the key, and at the very least, is now part of the discussion.  Everything the central banks have done since the financial crisis has been done to increase inflation. Their reaction, if inflation starts to increase, is key to determining what direction markets will take. Williams also believes higher interest rates will be the market’s death knell. If the market corrects, does the Federal Reserve still increase short rates three or four times in 2018? Would they cut rates? Williams believes Fed Chairman Powell knows what he should do, namely normalize monetary policy, but will he have the will to do so given the predictable negative reaction of the market?

Mr. Williams generally believes the U.S. is 12 years behind Japan and will follow the path of the Japanese economy with more and more quantitative easing and the Federal Reserve owning a greater and greater share of U.S. Treasuries. Higher interest rates would obviously increase the cost of this process and Williams believes this is one of the reasons the U.S. dollar has been declining. This is despite the fact that higher interest rates should make U.S. assets and the U.S. dollar more attractive to foreign investors.

A weaker U.S. dollar was a theme shared by many of the presenters, including Jeffery Gundlach and David Rosenberg. Because so many traders are short the dollar, Rosenberg cautioned the greenback could strengthen in the near-term if traders are forced to reverse course and cover their shorts, but he then sees the dollar continuing to weaken. He pointed out the desire of protectionists in Washington for a weak dollar and the potential loss of U.S. dollar reserve status over time along with increased debt levels making the dollar less attractive. A number of speakers also highlighted the loss of reserve currency status and concerns over high deficits as weighing on the dollar, including Morgan Capital Management’s Mark Yukos and GavKal co-founder Louis Gave. U.S. dollar bulls were hard to find at the conference.

Less unanimous were the views on inflation. Higher inflation is central to the idea that we are in the later stages of the business cycle and will force the Fed to continue raising interest rates. David Rosenberg, Grant Williams, and Jeffery Gundlach all viewed inflation playing this role, though not necessarily to the same degree. Demographer Neil Howe from Hedgeye Risk Management also believes inflation is heading higher, commenting how there are so few workers left to bring into the labour force and fiscal stimulus will just result in higher prices.

On the other hand, one of the lone bulls, Stephen Moore, doesn’t believe tax reform/cuts will be inflationary given it will result in a productivity-enhancing capital investment by companies, thus leading to an increase in supply, not demand. Supply increases are not inflationary, or so says Stephen Moore. As previously mentioned, Lacy Hunt’s view on the economy is such that he believes economic growth has already started to turn and that the price and wage increases we have already seen will be reversed; a sentiment largely echoed by Mark Yukos, who sees more quantitative easing in our future.

The impact of trade on the U.S. economy also received mixed responses. Discovery Institute founder George Gilder was less concerned about tariffs than the value of currencies, which he believes has a greater impact on trade flows. In referencing NAFTA, Gilder pointed out the 87% devaluation in the Mexican Peso has had a larger impact in terms of trade than the elimination of any tariffs thru the NAFTA treaty. David Rosenberg expressed more concern over what a trade war would do for the global economy, but it wasn’t the central theme of his presentation like it was for Geopolitical Futures’ George Freidman. Freidman was perhaps the most outspoken in detailing how the world is experiencing a global crisis of exporters that is more of a political problem than an economic one. Because of this, the solution will require or elicit political responses, not all of which will be positive.

In America, Trump ran on a negative trade platform that appealed to the segment of the U.S. population that largely paid the price for the growing U.S. trade deficit. With exports only representing 12% of U.S. GDP, however, countries like China and Germany will have greater challenges in dealing with the problem; an interesting perspective that few other presenters picked up on.

Niall Fergusson took a more pragmatic view on trade concerns, viewing recent moves by Trump to increases tariffs as a signal to China rather than an attack on free trade. Fergusson believes Trump was the only Presidential candidate to take the threat from China seriously and rightfully acknowledged that the World Trade Organization (WTO) has turned a blind eye to China’s unfair trade practices. He believes Trump is smart to take on China in this manner and believes recent moves by the Trump administration are being interpreted by China in this manner. A trade war will hurt China more than the U.S. and he believes China may make a concession on the issue of intellectual property rights, which the U.S. is expected to call China out on in the near future.

Perhaps just as notable as what was said at this year’s conference was what was not discussed. The risk of China suffering a hard landing or credit crisis was absent most all the speakers’ presentations this year, though, in fairness, this was largely the case at last year’s conference as well. The difference this year was the discussions around China were broader and included the economic advantages of a “technocracy” like China has versus democracy prevalent in most of the Western world and the U.S. in particular.

China’s leadership is able to direct and plan their economy, which could give them a competitive advantage in adopting technology given a command economy like China doesn’t need to wait for political approval. This was a point made by Mark Yusko, who described himself as a wild China bull since the mid-1990’s. He was echoed by Niall Fergusson, who pointed out the lead China has in mobile payments and the belief China will win the artificial intelligence race with the U.S.. Fergusson’s presentation at this year’s conference was focused on material from his latest book, “The Square and the Tower,” where he makes the case that the world is shaped by two distinct organizational forces, hierarchies and networks, and the new hierarchy created by technology giants like Google, Facebook, Apple and Amazon have created near-monopolies whereby ownership and power are increasing. Fergusson believes its early days for the conflict between big tech and Washington, but tech companies have their own agenda and future government action will be taken to reduce big tech’s political power and it won’t be based purely on anti-trust issues. Given China’s imperialistic ambitions, Chinese technology company goals appear more in line with the central governments and thus the Chinese government is more likely to support them.

Chinese imperialism was also a theme touched on by Louis Gave, though Gave was more negative in regards to Chinese growth as he believes there has been a paradigm shift following the 19th Party Congress whereby the environment, healthcare, and other consumption based policies will be prioritized over top line growth in China. No longer will China be exporting deflation to the rest of the world. This will be a welcome shift for trade deficit countries like the U.S. in the longer-term but the results won’t likely come soon enough for Trump. Even though exports have fallen from 40% of Chinese GDP to about 20% presently, China is still overly dependent on trade and this is one of the reasons George Freidman believes China is in a tough spot. Ok, maybe there was one negative speaker on China.

The other subject not discussed in depth at the conference is what happens during and after the next recession. David Rosenberg explored this to some extent, highlighting the Federal Reserve usually cuts short interest rates 400 to 500 basis points during a recession but likely won’t have the room to cut anywhere near this amount in the next recession. Given the U.S. is forecasting a budget deficit of 3.5% to 5% next year, during a time when the economy is expanding and the deficit could hit 8% during the next recession, fiscal policy is likely not an option either. Like last year, Rosenberg believes the next recession will see a Debt Jubilee where some mechanism is deployed to effectively cancel some or all of the government debt. Though Rosenberg didn’t go into the detail, we suspect inflation or extensive quantitative easing and debt monetization would be involved.

Grant Williams and Mark Yusko also alluded to the problem in relating the future course of U.S. monetary policy to that of present-day Japan, namely perpetual slow growth and quantitative easing. Interestingly, however, no speaker at the conference raised any warning regarding the future direction and prospects of Japan itself and articulated how the story ends. Described in the past by John Mauldin as a bug in search of a windshield, only favorable references were made about Japan and the prospects for Japanese equities this year. Maybe turning Japanese isn’t so bad after all?

One of the unique aspects of the Mauldin Strategic conference is the subject material is not based solely on markets and the economy. Geopolitical issues typically play a role on the agenda, as does the future of healthcare and other social issues. A discussion on anti-aging is always a favorite, with a biotech panel this year optimistically discussing how lifespans will be extended. The social benefits of this are obvious but they could also solve many of our future economic challenges. Lower health care costs would help reduce the U.S. entitlement spending problem as well as alleviate the demographic issues associated with low population growth.

Less positive were discussions regarding inequality and the resulting movement towards nationalism and populism that could take a turn towards the right or left. In many countries, including America, it’s up for grabs right now. A lack of trust in institutions is one of the reasons cryptocurrencies have gained traction. Speakers at the conference were split on the investment merits of Bitcoin and cryptocurrencies but we were struck by the degree of enthusiasm from some of the presenters who we would have considered to be more mainstream. They didn’t change our minds but they did make us think harder about the merit of Bitcoin, which is the main point of attending the conference.

So, general conclusions? We still think markets have room on the upside but starting to de-risk portfolios would appear prudent to us. We don’t see a recession this year and maybe not next year either. We do, however, see a progression towards the end of the business cycle finally starting to take shape with tighter monetary conditions finally beginning to develop.  In the shorter-term, however, stronger economic growth, higher earnings, and reasonably low-interest rates still make risk assets attractive.

While we haven’t raised cash to levels suggested by David Rosenberg, we have reduced interest rate risk where appropriate and relied on diversification to limit downside risk in what we expect to be a more volatile investment environment. We also have committed more capital to private equity, private debt, and real estate, which may be less liquid, but also less volatile. We agree with some of the presenters at the Mauldin conference regarding high valuations and the likelihood that investment returns will be lower in the future. Opportunities still exist, however, and protecting capital will enable investors the ability take advantage of the inevitable opportunities the next few years will bring. Dust off the recession investment playbook because a paradigm change is coming.

 

 

This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information presented here has been obtained from sources believed to be reliable, but not guaranteed. Returns are quoted net of fund/LP expenses but before NWM portfolio management fees. Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Please speak to your NWM advisor for advice based on your unique circumstances. NWM is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’ commissions. This is not a sales solicitation. This investment is generally intended for tax residents of Canada who are accredited investors. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. Nicola Crosby Real Estate, a subsidiary of Nicola Wealth Management Ltd., sources properties for the SPIRE Real Estate portfolios. Distributions are not guaranteed and may vary in amount and frequency over time. For a complete listing of SPIRE Real Estate portfolios, please visit www.nicolacrosby.com. All values sourced through Bloomberg.