Mulvihill x Wealthsimple – November Commentary
Stock markets around the globe rebounded slightly in November, recouping some of Octobers steep loses. Headwinds remain for stocks as investors continue to weigh risks surrounding rising interest rates, trade concerns, and geopolitical events. Emerging market stocks led the way in November returning 4.1% followed by US stocks up 2.0%. Canadian stock market continues to lag it’s US counterpart returning -3.7% for the year, trailing US stocks by 8.4% so far in 2018. The Mulvihill portfolio mandates remain heavily tilted towards US stocks, with a bias towards safety via low Volatility and quality ETF’s.
Fixed income returns were mostly positive for November, with Canadian bonds outperforming global peers. Emerging Market bonds were the worst performer declining -.2%. Allocation to fixed income remains as low as possible in the Growth portfolio at 15% and slightly above benchmark, at 40%, in the Balanced portfolio.
The three portfolios (Growth, Moderate and Conservative) recorded positive performance in November. The best performing holding was Health Care Sector ETF (ZUH) up 4.8%. We continue to view health care constructively in this environment as it offers a balance between safety, income and growth. Canadian Real Return bonds (XRB) ETF was the largest drag down -0.9% in the Growth portfolio, while US High Yield bond (XHY) ETF led declines in the moderate portfolio off -0.4%. The US dollar appreciated 1.03% vs Canadian dollar, adding to gains in the US holdings. The Growth and Moderate portfolio sold out of US Small Caps (IJR) and replaced it with a low volatility US Equity ETF (USMV).
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.