SIO Conference 2013
MARTIN GROSSKOPF
VICE-PRESIDENT AND PORTFOLIO MANAGER
DIRECTOR, SUSTAINABILITY RESEARCH
ACUITY INVESTMENT MANAGEMENT INC.
June 2013
Income Inequality
and the Market
Is there a cause for concern?
The land of “unequal opportunity?”
Source: BCA Research, as of May 31, 2013
Considerable global variation
Gini coefficient of household disposable income and gap between richest
and poorest 10%, 2010
0.50
30
Gini coefficient
S90/S10 income decile share (right scale)
0.45
25
0.40
20
0.35
15
0.30
10
0.25
5
0.20
0
Notes: See notes to Figure 1. Information on data for Israel: http://dx.doi.org/10.1787/888932315602
Source: OECD Income Distribution Database (www.oecd.org/social/income-distribution-database.htm)
S90/S10 income decile share
Gini coefficient (↗)
More Context
Source: Martin H. Barnes, Chief Economist, BCA Research, Key Issues in the Economic and Financial Outlook, May 2012
Negative impact of the financial crisis
Percentage point change in the Gini coefficient of household market and disposable
incomes between 2007 and 2010
6
Market income inequality (↗)
Disposable income inequality
4
2
0
-2
-4
Source: OECD Income Distribution Database (www.oecd.org/social/income-distribution-database.htm)
Positive effects of redistribution
Source: Barry Bannister, Economic Outlook, 2013
Negative impact of the financial crisis
Positive aspects of recovery
Source: Ned Davies, US Economic Outlook, June 13, 2013
Negative: wage growth at a 25yr low
Source: FactSet, Bureau of Labour Statistics, Macquarie Research, June 2013
Positive: Corporate Profit Margins & Unit Labour Costs (ULC)
Source: Ned Davis Research, 2012
Positive: S&P Stock Index & Non-farm Unit Labour Cost
(ULC)
Source: Ned Davis Research, 2012
Going forward: factors of production respond differently
•
In 3 deepest recession since 1970 one factor always lagged
Source: Barry Bannister, Economic Outlook, 2013
Going forward: offshore unit labour benefit is dissipating
Source: BCA Research, as of December 31, 2012
Disclaimer
The commentaries contained herein are provided as a general source of information based on information available as of June 13, 2013 and
should not be considered as personal investment advice or an offer or solicitation to buy and / or sell securities. Every effort has been made
to ensure accuracy in these commentaries at the time of publication, however accuracy cannot be guaranteed. Market conditions may
change and the manager accepts no responsibility for individual investment decisions arising from the use or reliance on the information
contained herein.
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 including changes in share
and/or unit value and reinvestment of all dividends and/or distributions and do not take into account sales, redemption, distribution or
optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed; their
values change frequently and past performance may not be repeated
The information contained in this commentary is designed to provide you with general information related to investment alternatives and
strategies and is not intended to be comprehensive investment advice applicable to the circumstances of the individual. We strongly
recommend you to consult with a financial advisor prior to making any investment decisions.