As we may remember 2018 was a robust year for investment returns until Santa turned grumpy in December. There was no Santa Claus rally, and in fact Santa took back the market gifts of 2018. We were left with the proverbial lump of coal under the tree. Canadian, US and International stock markets ended negative for the year.
Here’s an overview on the 2018 market and ETF returns. In the end it was a lackluster year; and not worries on that front not all years are positive for the markets as we know. Though markets mostly go up – that’s why we invest in the greater growth assets known as stocks. Stocks allow us to become owners of outstanding businesses with incredible revenues, profits and prospects.
2019 has returned to growth. And investors who were scared off in December missed out on this nice rally. Of course the most important component of investing is your behaviour. Can you stay the course through any market turbulence? You must invest within your risk tolerance level so that any drop in portfolio value does not cause you to sell. The way we typically manage risk is by way of holding enough bonds in concert with those stocks.
Related post: Stocks are the unruly kids, bonds are the adult in the room.
Canadian, US and International stock markets are positive in 2019. For the purposes of this article and the reporting of returns, we’ll go to date as of July 12, 2019.
For the Canadian Market
iShares TSX composite XIC – 17.3%.
iShares TSX 60 XIU -17%.
If we check in on some Canadian dividend focused ETFs we see…
iShares Canadian Quality Index Fund XDIV – 18%
IShares Dividend Aristocrats – CDZ – 16.5%
Vanguard High Dividend VDY – 14.7%
iShares High Dividend XEI – 17.5%
Checking in on the Canadian REITs
iShares XRE – 15.7%
Vanguard VRE – 15%
BMO ZRE – 18.5%
iShares Core Bond Universe XBB – 5.7%
BMO Short Term Bond ZSB – 2.2%
iShares Corporate Hybrid XHB – 6.6%
US Stocks in Canadian Dollars
iShares Total Market XUU – 15%
BMO S&P 500 ZSP – 15.5%
US Stocks in US Dollars
iShares Total Market ITOT – 21.5%
US Dividend Funds in Canadian Dollars
iShares US High Dividend XHU – 9.9%
BMO US Dividend ZDY – 8.9%
US Dividend Funds in US Dollars
ProShares Dividend Aristocrats NOBL – 17.7%
Vanguard Dividend Achievers VIG – 21.2%
International REIT US Dollar
US and International REIT, ticker REET – 18.4%
International REIT Canadian Dollar
iShares Global REIT CGR – 11.9%
iShares Core EAFE XEF – 9%
iShares Emerging Markets XEC – 5.3%
US and Global Bonds
BMO Global Bond Fund ZMSB – 8%
US Bonds in US Dollars
US Aggregate Bond AGG – 5.7%
US Long Term Treasuries TLT – 9.1%
US Mid Term Treasuries IEF – 6.1%
US Bonds in Canadian Dollars
BMO Mid Term US Treasuries ZTM (-).7%
BMO Long Term Treasury ZTL – 3.6%
BMO Mid Term Corporate ZIC – 5%
Portfolio Returns in 2019.
For a core passive indexing approach in Canadian dollar accounts we see returns of 17% in Canada, 15% for US markets, 9% for International markets with Canadian bonds chipping in at 5.7%.
A Classic Balanced Portfolio with equal weight Canada, US and International stocks each at 20% with bonds at 40% would see returns of 9.4%.
An equal weight all-equity approach would have seen returns at 13.7%.
The Tangerine Portfolios can help us frame the returns of a simple core portfolio, and can put things into perspective over the last decade or more. Keep in mind that these returns are to end of June. The month of July would have tacked on additional returns near 1% for the Equity Growth Portfolio. The MER on the Tangerine Portfolios is 1.07%. It’s important to know the benchmarks. If we are under performing over the longer term we can look under the hood, analyze the investment approach and the assets to discover the potential areas of improvement.
Fore more here’s an article I wrote for Seeking Alpha on the returns of my portfolio and that of my wife’s, to end of June 2019.
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