The Solidarity Fund of the FTQ was the victim of a real panic among its shareholders when the request for share buybacks exceeded the $ 3 billion mark in the last fiscal year running from June 1, 2019 to May 31, .
Fearing a sharp drop in the share price of the Solidarity Fund following the stock market collapse (from February 21 to March 23) and the economic crisis triggered by COVID-19, some 61,000 shareholders of the Fund de Solidarité de la FTQ decided, in March, April and May, to get their balls out before the price revision this week. The stock price fell $ 1.96 from $ 46.20 to $ 44.24.
For the year as a whole, 81,000 shareholders took their savings out of the Fund, i.e. almost 17% of active shareholders in 2019.
This is enormous when you know that only shareholders in early retirement, retirement or eligible for exceptional over-the-counter redemptions (job loss, return to school, serious illness, etc.) can ask the Fund to redeem their shares. .
NEVER SEEN !
To realize the magnitude of these withdrawals of $ 3 billion, know that this represents in a single year almost a third of the total amount ($ 9.7 billion) of withdrawals made during the previous 36 years, that is to say the creation of the Fund in 1983 until 2019.
Other comparative data which significantly represents the extent of redemptions made this year: the $ 3 billion in withdrawals equivalent to the total sum of new share issues made by the Fund in 3 ½ years of activity, ie from December 1, 2016 as of May 31st.
The fact remains that the withdrawals had the effect of reducing the net assets of the FTQ Fund by some 12% compared to last year. Today he finds himself with net assets of $ 13.8 billion, barely a little higher than in 2017.
That said, the wave of massive withdrawals did not have the consequence of weakening the financial situation of the Solidarity Fund.
LOW RECOIL
It must be said that over the past six months, the fund managers have done relatively well. They closed the last half (December 1, 2019 to May 31, last) with a decline of 4.2%.
This is a slight decline compared to that of the Canadian stock market indices: the S & P / TSX Toronto Composite Index fell 9.3% in the same six months, the S & P / TSX Small Cap Index for its part fell by 14.4%, and the index of Quebec securities “Morningstar Quebec National Bank” fell by 19.8%.
If you compare the semi-annual performance (-4.2%) of the FTQ Fund with that of comparable Canadian mutual funds, know that it obtains a similar return to the National Bank Portfolio Meritage balanced fund (-4.05%) and that it plunges the Desjardins Tactical Balanced Fund (-11.4%).
As we can see, the FTQ Fund is emerging from the current troubled period without having seen its portfolio collapse, despite the fact that it is obliged, due to its nature, to invest a large portion of his money in venture capital.
For the whole of the 2019-20 financial year, the Fund ended the year with a slight gain of 0.8%. The loss of the second half (-4.2%) was offset by the gain made during the first half, a gain of 5.2%.
THE FTQ FUND IN NUMBERS
Share issues since 1983
Share buybacks since 1983
Net assets as of May 31, 2020
Number of shareholders: 707 935
Ratio of operating expenses to assets: 1,5 %
Annualized return over 5 years: 5.9% (3.4% for S & P / TSX)
Annualized return over 10 years: 6.4% (5.7% for S & P / TSX)
Tax credits offered: 15% Quebec, 15% Ottawa
Fondaction CSN surprises
The second workers’ fund, Fondaction de la CSN, usually reports a lower return than that of the Fonds FTQ.
Surprise! During the second half of the year, Fondaction managed to beat the FTQ Fund by posting a minimal decrease, -0.6%, compared to -4.2% for the FTQ Fund.
Such a performance (-0.6%) is in itself a real tour de force following the great stock market slump that occurred in February and March, and the paralysis of the Quebec economy because of COVID-19.
Fondaction ends its 2019-20 fiscal year up 3.3%, surpassing all Canadian stock market indices.
Share buybacks
The CSN fund was also the victim of a major wave of share buyback requests.
The value of redemptions for the year was $ 287 million, 10 times less than the Fonds FTQ.
It must be said that the Solidarity Fund has four times more shareholders in its ranks than Fondaction, which has 176,488.
Fondaction’s net assets, of $ 2.26 billion, are six times smaller than that of the FTQ Fund.
Fondaction’s annualized return is 4.2% over 5 years and 3.3% over 10 years.
Investing in Fondaction provides a 35% tax rebate, 20% at the provincial level and 15% at the federal level.
Contributions eligible for tax credits are capped annually at $ 5,000, for all labor-sponsored funds.
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