2022 Year in Review in Canada: Inflation, Market Correction and Continued Growth in Impact Investing

If there was a dominant theme for the financial markets in 2022, it would undoubtedly be volatility. 

With inflation the key driver of dramatic market changes, it quickly became the sign of a sharp course correction after a year of growth driven primarily by government subsidies designed to boost the post-pandemic economy. Read on for our annual year in review, with a focus on 2022’s volatile markets.

Inflation and Interest Rates Soar

While inflation typically averages under two percent per year, in 2022 it hit eight percent, driven in part by supply chain issues created by the pandemic (particularly the COVID-zero policy in China) and geopolitical conflicts such as the war in Ukraine, which drove energy prices up, affecting nearly every sector, as well as in part by massive pandemic government subsidies that resulted in additional funds flowing into the monetary system. 

And here in Canada, as the Bank of Canada stepped in to bring inflation down, Canadian interest rate increases hit their highest level in 15 years, setting off a spiral of economic outcomes ranging from stock market declines to mass layoffs in the tech sector, to margin compression in the service sector and a slowdown in the real estate market. 

“It was a very difficult market, with swings that were unbelievable,” says Wayne Wachell, Genus’ Executive Chair Person and Co-Chief Investment Officer. “We saw the biggest correction in the bond market since 1983.”

financial markets review in 2022

Impact Portfolios Weather the Storm

The volatility also affected ESG investments, thanks to surges in the energy sector and challenges in the tech sector. But not all ESG products suffered equally, and experts maintain that ESG is here to stay.

Genus’ value and dividend investments as well as our impact portfolios had a much better year than most. “Overall our ESG funds have done well except for the more growth-oriented ESG fund,” says Mike Thiessen, Chief Sustainability Officer and Co-Chief Investment Officer at Genus. “Our Fossil FreeTM Dividend Fund outperformed the market, and our Impact Equity Fund was our second best performing fund, beating the MSCI World Index benchmark by 9.9% on annual returns for 2022. Our Impact Bond Fund also beat the MSCI World Index benchmark,” he adds. “During COVID-19 it was also our best performing fund. We can see that impact funds perform well in times of crisis and that’s becoming attractive to investors.”

Our Approach to Changing Market Conditions

While we are constantly adjusting our portfolios in response to unstable markets and in order to mitigate volatility, last year’s financial conditions precipitated specific adjustments to client portfolios. “Overall we reduced areas exposed to high interest rates,” says Wachell. “For example, we decided to go underweight for real estate in the last six months. We also reduced technology companies in our portfolios and added more exposure to energy in our traditional funds. We’ve also started reducing equities and we’ve bought more low-volatility dividend stocks.”

Thanks to the strong performance of our impact portfolios, we saw prospective clients consider skipping right over the negative screen approach and make the leap straight to impact investing, Thiessen adds. “About half of the institutional prospects I saw were looking at impact first.”

Join us on January 26 in person or via livestream for an in-depth year in review and outlook on 2023


Client impact

“Graduating from a big bank to Genus was one of the best financial steps we've ever taken. Genus has delivered reliable asset growth despite our moderate risk tolerance. As our financial security has grown, we've also been the beneficiaries of a great client experience. The company's communications have been consistently transparent and informative, including educational webinars and a well-designed web portal where we can track investments daily. Most importantly to us, our portfolio manager has always responded swiftly and thoroughly to our questions and requests. ”
Martin T.
"Having relatively diverse financial goals and needs, along with a slight reticence regarding the stock market, Genus skillfully addressed all of our concerns, and put together a truly exceptional plan: Fossil free funds and a diversified investment portfolio, check; An effective Impact investment portfolio that coincides with our hopes and dreams for a better world, check; Professional advice and assistance to create a donor advised charitable fund with immediate charitable receipts for tax purposes, check. Returns? Way beyond our expectations! We even had some fun along the way and certainly enjoyed an incredible two-year start to what will be a satisfying long-term relationship with Genus."
Marc B.
“I love the service I get at Genus.”
Chris H.
“Leslie and I were fellow board members when we met twenty years ago. For the last ten she has been thoughtful in the construction of an investment strategy for my family and is executing the strategy as planned. The team at Genus has met my expectations and are a pleasure to deal with.”
Bob Q.
“For over 15 years, I have provided selection and performance evaluation of multiple investment managers for a significant family office. Leslie and Genus have been foundational for me in my role. I have always found Leslie and her colleagues to be insightful and proactive, and found the performance of their portion of the portfolio to be well above benchmarks. And they have been a great pleasure to work with.”
Douglas H.
“Genus is a very innovative firm. I am pleased to invest in their Fossil Free and Impact strategies that help me invest in line with my values.”
Marnie C.
“Great team of professionals. Excellent website and reporting. Responds to inquiries promptly. Very pleased with the process of changing from another company to Genus as well. Kudos.”
David L.
“Genus consistently provides a good, clearly explained, comprehensive picture of the general economic and financial situation, along with an excellent account of the investment decisions made in relation to this. Genus’ equally strong concern with clients’ questions and requests for further information is also a very important part of the service it provides.”
Allan S.
“Back in 1992 when I found myself at fifty with a substantial amount of money to invest, I knew just one thing — that I didn’t want to contribute to tobacco companies, arms manufacturers, or oil. But over the ensuing years the options for socially responsible investing have become far more sophisticated and I’m very happy that this is a big part of the Genus approach. I also very much appreciate the long-term relationship with my portfolio manager, Mary Lou.”
Ann P.

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