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Market week: Stocks rally on early Covid-19 drug trial

Published on 04-17-2020

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Fund news: CI cancels gold fund merger, Dynamic consolidates energy fund


The major North American stock market indices posted gains on the week, as reports of a promising experimental drug treatment for the Covid-19 virus surfaced. Reports indicated that early trials of remdesivir by drug giant Gilead Sciences Inc. (NSD: GILD) showed rapid recovery in a small group of patients in an early clinical trial.

Looking for any kind of market recovery, investors piled into U.S. stocks, boosting the blue-chip S&P 500 Composite Index to a 3.0% gain on the week, while the Nasdaq Composite Index doubled that with a 6.1% rally. Toronto’s S&P/TSX Composite lagged, with a 1.4% gain, held back by a 20.0% weekly loss in the price of a barrel of crude oil, the shutdown of virtually all of Canada’s energy sector, and a 2.9% drop in the price of an ounce of gold.

The main macro-economic datapoints remain vastly distorted by the massive slump in economic activity brought on my stringent public health measures to limit the spread of the Covid-19 virus. Canada’s gross domestic product is estimated to be down about 9% in March, according to a flash release by Statistics Canada this week. Unemployment numbers in the millions across both Canada and the U.S., while central banks open the liquidity taps and governments take extraordinary fiscal steps to prop up consumers and businesses.

The Bank of Canada’s quarterly Monetary Policy Report predicts a serious recessionary environment for at least the first half of the year, but gave wide latitude to its depth and length. Still, investors hammered by the March market meltdown were looking for any positive news at all, and the reports of Gilead’s tests provided it.


* CI cancels gold fund mergers. CI Investments Inc. announced on April 16 that the merger of its Signature Gold Corporate Class into Sentry Precious Metals Class, originally scheduled to take place this spring, will not be proceeding.

CI said in a release that current market conditions have prompted it to continue offering the fund because of its significant holdings in gold bullion. Signature Gold Corporate Class was re-opened to new investors effective April 1, 2020.

The Signature fund is managed by Robert Lyon, Head of Equities at Signature Global Asset Management, CI’s largest in-house portfolio management team. It invests primarily in gold and gold-related stocks. The fund may also invest in silver, platinum, and palladium with about half the portfolio allocated to bullion and half to securities of gold and other precious metals producers.

* Dynamic consolidates energy fund. Dynamic Funds announced on April 9 that it will consolidate units of Dynamic Energy Income Fund, effective on or about May 8. Units of each series of the fund will be consolidated on a 5:1 ratio, meaning that unitholders will be entitled to receive one consolidated unit for every five units of the fund they own on that date. The fund will be closed to purchase orders two days before the effective date, and redemptions will continue only by direct orders during this time.

The company said in a release that the net asset value per unit of each series of the fund will increase by the consolidation ratio, so that the unit consolidation has no impact on the value of the unitholder’s investment in the fund. And each unitholder’s cost per unit will be increased by the same consolidation ratio, although their total cost will remain unchanged.

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