Mulvihill x Wealthsimple – August Commentary
US stocks remained the place to invest in August, advancing 3.3% in the month, significantly outpacing stock returns in Canadian, International and Emerging Markets. Emerging markets made headlines as one by one currencies from these countries depreciate dramatically and stock markets sold off. The MSCI Emerging Market index is down over -7% YTD, vs S&P 500 returns of nearly 10% The Mulvihill portfolio mandates continue to have no exposure to emerging market equities. We view US equities, specifically small cap and value oriented US stocks, as providing better risk reward opportunities.
Fixed Income remains under pressure globally in 2018 with emerging market declines leading to the downside off -1.3%. In August. Canadian and US Fixed Income markets were positive in August. Our allocation to fixed income remains as low as possible in each portfolio as interest rates rise from depressed levels globally.
The three portfolios (Growth, Moderate and Conservative) recorded positive performance in August. The best performing holding was US Small Cap (IJR) up 4.8% while exposure to Gold (CGL) continued to be a drag on performance off -2.3%. The US Dollar appreciated 0.26% vs Canadian dollar, adding to gains in the US holdings. No trades were made in any of the mandates in August.
This document may contain certain forward-looking statements. These statements may relate to future events or future performance and reflect management’s current expectations. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. Although the forward-looking statements are based upon what management believes to be reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Neither the Funds nor their respective managers assume any obligation to update or revise any forward-looking statement to reflect new events or circumstances. Actual results may differ materially from any forward-looking statement. Historical results and trends should not be taken as indicative of future operations. The Fund is not guaranteed, its value changes frequently and past performance may not be repeated. Unless otherwise indicated and except for returns for period less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data take into account distributions or dividends paid to unit holders but do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns.