Investor’s guide: Market volatility

Table of contents

4 Perspectives5 The market has faced many economic downturns over time6 These downturns can create an emotional rollercoaster7 Recessions, while unsettling, are usually short-lived8 Remember that markets tend to stabilize rather quickly9 Ultimately, the ride up is usually bigger than the ride down

10 Strategies11 Avoid trying to time the market12 Keepawell-diversifiedportfolio13 Consider a ‘Dollar-Cost Averaging’ strategy

14 Key takeaway15 Markets eventually recover despite volatility

Perspectives

| 5 Perspectives

The market has faced many economic downturns over timeHistorically, despite many periods of increased volatility, markets have remained resilient.

S&P 500 Index – Price

Source: Morningstar Direct

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

GlobalFinancial Crisis

European Sovereign Debt Crisis, Greece credit downgraded

Global Stock Market Plummet

Brexit Referendum

Fed Raises Rates 3 times in 2017

December 2018 Selloff

| 6 Perspectives

These downturns can create an emotional rollercoasterIt’s not easy for investors to manage their emotions. There is a tendency to get excited and buy just as markets are set to decline, and to panic and sell just as markets are set to recover.

S&P 500 Index – Price

Source: Morningstar Direct

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

104 -783 1,762 667 -669 -2,532 -1,849 -15 841 4,398 3,559 6,139 -1,337 3,048 1,763 -2,543

US Equity Category – Net Flows ($Millions)

Panic

Denial

Sell now!

The price keeps going up I’ll buy more

EuphoriaConfidence

| 7 Perspectives

Recessions, while unsettling, are usually short-livedThe good times (economic expansion) usually last much longer than the bad times (economic recession).

Length of recessions and expansions – January 1902 to February 2020

Source: National Bureau of Economic Research, February 2020

Expansions

Recessions

Current expansion(as of February 2020)

Num

ber o

f mon

ths

0

40

80

120

160

2020

2007

2001

1990

1981

1980

1973

1969

1960

1957

1953

1948

1945

1937

1929

1926

1923

1920

1918

1913

1910

1907

1902

Recession is the number of months from the peak to the trough of the market cycle.Expansion is the number of months from the previous trough to latest peak.For example: March 1991 to March 2001 was an expansionary period lasting 120 months

| 8 Perspectives

Remember that markets tend to stabilize rather quicklyMany of the strongest returns in the markets occur in the period immediately following a sharp decline. Those who exit the markets, even for a short while, risk missing great opportunities when the markets recover.

S&P/TSX Composite Total Return Index

12-month return12-month return following

negative return

5-year return following negative return

(absolute) (annualized)

December 1957 -21% 31% 72% 11%

May 1970 -24% 23% 49% 8%

September 1974 -31% 23% 168% 22%

June 1982 -39% 87% 227% 27%

August 2001 -33% -9% 79% 12%

December 2008 -33% 35% 76% 12%

March 2020 -14% ? ? ?

Source: Mackenzie portfolio analytics

| 9 Perspectives

% c

hang

e

-100

0

100

200

300

400

500

600

2020201520102005200019951990198519801975197019651960

526%

451%

72%

280%526%

87%86%76%52%

90%104% 108%

451%

-30%-17% -15%-45% -51%

-14% -22% -16% -29% -43%-14%

Ultimately, the ride up is usually bigger than the ride downMany of the strongest returns in the markets occur in the period immediately following a sharp decline. Those who exit the markets, even for a short while, risk missing great opportunities when the markets recover.

S&P/TSX Composite Total Return Index

Source: Bloomberg, February 2020

Bull & bear factsAverage gain in bull market: 144%Average length of bull market: 55 monthsAverage lost in bear market: -27%Average length of bear market: 14 month

Strategies

| 11 Strategies

Avoid trying to time the marketIt’s virtually impossible to know when markets will rebound. Trying to time the market may sometimes look like a smart move, but your long-term investment performance will likely be worse than if you had simply stayed invested through the bad times.

Growth of $10,000 – S&P 500 Index

Source: Bloomberg, January 31, 2009 – December 31, 2015. Unlike mutual funds, the returns and principal of GICs are guaranteed.

Invested another $10,000in the S&P 500 on Mar 31, 2009Stayed invested in the S&P 500Removed from market and invested in a GIC

$0

$10,000

$20,000

$30,000

$40,000

$50,000

December 31, 2015March 31, 2009January 31, 2007$10,000 invested

(Mar

ket

low

– M

ar 2

00

9)

$46,776

$17,220

$6,642$5,826

| 12 Strategies

Keep a well-diversified portfolioBy diversifying your portfolio across different asset classes, you can achieve greater consistency in returns, and ultimately protect yourself against market volatility.

A diversified portfolio can help reduce volatility

Can Equity European EquityUS Equity

Can Neutral Bal Global Neutral BalFloating Rate Loans

Can Corp Bonds Can Govt Bonds Global Bonds

Global Govt BondsGlobal HY BondsAsian Equity

Source: Morningstar Direct, as at February 29, 2020.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20199.6% 58.2% 17.6% 10.2% 19.5% 41.3% 23.9% 21.6% 21.1% 23.0% 4.2% 24.8%9.0% 50.2% 15.1% 8.2% 16.5% 33.6% 10.6% 17.6% 15.7% 17.3% 1.9% 22.9%5.7% 35.1% 10.9% 6.4% 14.2% 19.5% 9.4% 16.5% 9.9% 13.8% 1.5% 17.5%0.2% 17.7% 10.1% 6.3% 13.4% 13.0% 9.3% 4.4% 8.1% 9.1% 1.1% 13.3%

-16.0% 16.8% 9.1% 4.6% 10.4% 11.7% 9.0% 3.8% 7.6% 7.5% 1.1% 12.9%-18.8% 16.3% 8.8% 3.3% 7.4% 10.5% 8.8% 2.7% 4.3% 6.7% -0.5% 12.8%-21.2% 15.6% 8.6% 2.1% 7.2% 7.9% 8.6% 1.9% 3.7% 5.6% -2.8% 8.1%-27.3% 15.3% 7.3% -0.6% 6.5% 6.2% 8.5% 1.6% 3.7% 3.6% -3.7% 7.8%-29.2% 7.4% 6.5% -0.9% 6.2% 1.0% 7.6% -0.2% 3.6% 3.4% -4.5% 7.7%-30.7% 5.0% 5.0% -8.7% 6.0% 0.8% 3.3% -0.5% 1.3% 2.6% -5.7% 7.4%-33.0% 1.6% 3.8% -8.9% 5.4% 0.6% 2.5% -2.0% 0.9% 2.2% -7.2% 6.9%-33.0% 1.2% -1.5% -13.0% 2.6% -2.0% 2.3% -8.3% -3.8% 1.8% -8.9% 6.4%

Bes

t per

form

ers

Wor

st p

erfo

rmer

s

| 13 Strategies

Consider a ‘Dollar-Cost Averaging’ strategyRather than investing all your money at once, making a commitment to invest a smaller amount on a regular basis may lower your average cost per unit by purchasing more units at lower prices.

DCA in a fluctuating market

This hypothetical illustration shows how investing $300 each month in a fluctuating market can potentially help reduce the overall cost of the portfolio by buying more securities when the price is lower and fewer when the price is more expensive. For illustrative purposes only.

Securities bought Security price

Secu

rity

pric

e ($

)

Secu

ritie

s po

rcha

sed

0

6

12

18

24

30

1211109876543210

4

8

12

16

Months

Falling marketReducetheeffectsofmarketriskbybuying

more units at lower prices.

Rising marketReducetheeffectsofmarketriskbybuying

fewer units at higher prices.

Key takeaway

| 15 Key takeaway

0

4,000,000

8,000,000

12,000,000

16,000,000

20,000,000

1965

-08-

31

1967

-12-

31

1970

-04-

30

1972

-08-

31

1974

-12-

31

1977

-04-

30

1979

-08-

31

1981

-12-

31

1984

-04-

30

1986

-08-

31

1988

-12-

31

1991

-04-

30

1993

-08-

31

1995

-12-

31

1998

-04-

30

2000

-08-

31

2002

-12-

31

2005

-04-

30

2007

-08-

31

2009

-12-

31

2012

-04-

30

2014

-08-

31

2016

-12-

31

2019

-04-

30

$18.9M

$10K

Markets eventually recover despite volatility Staying the course is of the utmost importance during periods of volatility as it has historically enabled investors to fully recover from these periods and achieve their long-term investment goals.

Growth of a $10,000 investment, 1950-2019

Source: Morningstar Direct / Bloomberg. Snapshots in time of significant negative impact international events from 1950 to March 2009, and the subsequent change in market value from the S&P 500.

Crisis Market low 1 yr later

Korean war July 13, 1950 28.8%Cuban missile crisis September 23, 1962 33.8%JFK assassination November 23, 1963 25.0%1969-70 Market break May 26, 1970 43.6%1973-74 Market break June 12, 1974 42.2%1979-80 Oil crisis March 27, 1980 27.9%1987 Stock market crash October 19, 1987 22.9%Desert storm October 11, 1990 21.1%Soviet coup d’état attempt August 19, 1991 11.1%Asianfinancialcrisis April 2, 1997 49.3%Dot-com bubble crash /Sept 11 / Enron October 9, 2002 33.7%Invasion of Iraq March 11, 2003 38.2%North Korean missile test July 17, 2006 25.5%Subprime mortgage crisis March 9, 2009 68.6%Average appreciation 33.7%

11.21% Annualized return

Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns as of April 30, 2020 including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution, or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Index performance does not include the impact of fees, commissions, and expenses that would be payable by investors in the investment products that seek to track an index.

The contents of this document are provided for illustrative and marketing purposes and do not constitute specific advice regarding your personal investment situation or provide specific individual advice about investment, insurance, financial, legal, accounting, tax or similar matters. Certain information contained in this document is obtained from third parties. Mackenzie Investments believes such information to be accurate and reliable as at the date hereof, however, we cannot guarantee that it is accurate or complete or current at all times. The information provided is subject to change without notice and Mackenzie Investments cannot be held liable for any loss arising from any use of or reliance on the information contained in this document. No portion of this communication may be reproduced or distributed to anyone without the express permission of Mackenzie Investments.

This document includes forward-looking information that is based on forecasts of future events as of April 30, 2020 . Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.

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