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Mulvihill x Wealthsimple – December Commentary

Performance & Market Commentary

Stocks

Stock markets around the globe accelerated to the downside in December, led by US Stocks (S&P 500)  which fell 9% in the month, resulting in the first annual loss since the financial crisis over a decade ago. While US stocks were the worst performer for the month, they outpaced Canadian, International and Emerging Market stocks for the year. Headwinds remain for stocks heading into 2019,  as investors continue to weigh risks surrounding  rising interest rates, trade concerns, and geopolitical events. The Mulvihill portfolio mandates remain heavily tilted to US stocks, with a bias towards safety via low volatility and quality ETF’s.

Fixed Income

Fixed income returns were positive in December, offering investors protection from volatile stock markets.  US bonds outperformed global peers in the month, while Canadian bonds were the only group to offer a positive return in 2018. International Developed Market bonds were the worst performer for the year declining -3.5%.  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.

Portfolios

The three portfolios (Growth, Moderate and Conservative) recorded negative performance in December. The best performing holding was Gold (CGL) up 4.9%, serving its purpose in the portfolio as an uncorrelated asset class that provides positive returns during turbulent markets.  US Value stocks (RPV) was the largest drag down -12.1%. The US dollar appreciated 2.6% vs Canadian dollar in December and 8.5% for the year, helping offset some loses in the US holdings. No trades were made across the three portfolio’s in December.

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.

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