Manulife Canadian Opportunities Balanced GIF Select

Manager Commentary

• As at March 31, 2013

The portfolio currently holds approximately 15.0% in cash, 23% in Canadian Equities, 15.0% in U.S. equities, 27% in corporate bonds and 12% in Canadian government bonds and remainder in other regions.
The portfolio maintained an overweight to Health Care (+9.1), Information Technology (+6.9%) and Consumer Staples (2.2%). We emphasize an overweight to health care companies as they show attractive valuation and strong earnings growth and balance sheets. The portfolio has an underweight to Materials (-10.2%), Industrials (-2.8%), and Telecommunication Services (-1.8%).
The fund added several new names including Valeant Pharmaceutical, AstraZeneca and Tourmaline Oil Corporation. The fund eliminated positions in Apple, Arch Coal and Comerica Bank in the quarter.
The S&P/TSX has a large exposure to commodities and the health of the Chinese and U.S. economies is important for both the Canadian economy and capital markets. From what we know today, the U.S. economy should continue to grow at an average rate of 2.5%. However, the risks are to the upside with stabilization in both the housing and employment. Also, the US Auto sector is improving and the auto sector's improved health should not be underestimated. In China, with moderation in inflation in both housing in food staples, this will provide a newly appointed government to implement growth mandates.
There remain challenges in the upcoming year including the outcome of the U.S. debt ceiling and spending discussions but we believe this will be noise, and looking back on 2013, dips in the market will prove to be opportunistic in entering the market.