And we’re at the halfway mark for 2024 for sector and stock market performance evaluation. In Canada, it’s energy in the lead with materials coming up the inside looking to challenge. Yup, it’s still inflation fighters leading the way. Interest rate sensitive stocks continue to stumble and trip and cause their owners some considerable stress. As per the trend of the last 20 years, U.S. stocks continue to trounce Canadian stocks. It was a good first half for investors on the Monday Reads.
For the first haf of 2024, in Canadian dollar terms.
- Canadian stocks 6.4%
- U.S. stocks 20%
- International 9.1%
To the above, here’s some added context from 2020. Inflation started to take hold in 2021; we had 2022 as a negative year for stock markets. Oil and gas stocks are known as THE best inflation-fighting equity sector. I put oil and gas stocks on the table in late 2020.
I also suggested the Purpose Real Asset ETF (PRA.TO) as a one stop inflation fighting ETF. From 2022 PRA has delivered 8.9% annual vs 3.8% for the TSX Composite.
Buy ETFs for free at Questrade
That ETF can turn a typical balanced portfolio into a version of an all weather portfolio – you always have something that’s working no matter what the economic conditions. You add more cash and /or ultra-short treasuries (UBIL.TO) to create a more traditional all-weather portfolio.
Ulra short and long bonds would typically make up the bond component for all weather portfolios.
2024 looking good, says market history
History (from 1950) says we have a 100% chance of solid returns for U.S. stocks in 2024. But – “past performance does not GUARANTEE future returns”.
In the first half of 2024, the U.S. stock market experienced significant gains, with the S&P 500 recording its second-best first half in history, adding over $16 trillion to the markets. The Nasdaq 100 and the S&P 500 both closed at new all-time highs for the quarter.
Low volatility stocks for retirement
A consistent theme on this blog is the not well-understood benefit of low volatility stocks for retirement. Here’s another fine example – U.S. consumer staples from 2000.
Add healthcare and utilities to the defensive sector basket for retirement.
Check out the GIC rates at EQ Bank
On Findependence Hub, BMO took a look at the utilities sector.
On Cut The Crap Investing I recently discussed the significant tailwinds for utilities in the U.S. That’s largely thanks to AI and the electrification of the transporation space.
More on the Canadian home bias
From Jonathan Chevreau, Vanguard looks at Canadian investors who use the Vanguard ETFs.
Some more framing on that underperformace of Canadian stocks vs U.S. stocks thanks to Frances Horodelski. Can you can follow her blog here.
Asset allocation ETFs in 2024
The asset allocation ETFs are the game changers for many or most Canadians, especially those stuck in high-fee Canadian mutual funds.
Here’s a look at the performance for the iShares asset allocation ETFs in 2024.
- XCNS – 4.86%
- XBAL – 7.27%
- XGRO – 10.97%
- XEQT – 12.33%
That’s a fantastic first half for the managed, global all-in-one ETF portfolios. If you want to know how to trade up to one of these wonderful one ticker portfolios, send me a note via that contact form. The basics include matching your risk tolerance and time horizon to the portfolio. Of course, it all has to fit the master finanical plan.
More Sunday Reads
Lets’ check in with Dividend Hawk for the stock stories and blog posts of the week. That included General Mills with a soft earnings report.
Non-GAAP EPS of $1.01, 10% below last year’s result but $0.02 more than expected. Revenue of $4.71 billion misses analyst estimates by $150 million and decreased 6.4% versus the same quarter last year.
Given the weakness of the Canadian Dollar (and the Canadian economy) here’s a timely post from stocktrades – Hedged vs unhedged ETFs – what should you do? That’s a very solid post. Most experts agree that we should not currency hedge. That said, I agree with Dan at Stocktrades that for money that has a short term time horizon we might hedge.
In the long run it all comes out in the wash, with non hedging showing an advantage. For U.S. companies, a weak U.S. dollar will mean foreign profits get a currency boost. U.S. exports become cheaper as a benefit to those exporters.
And for a Canadian, if you hold significant Canadian assets your holdings will enjoy any Canadian currency strength. There’s a built-in ‘hedge’.
Rethinking early “retirement”
GenYMoney has an interesting post on the FI (Financial Independence) movement and an FI’er who disappeared to then reappear with a sad story on their FI journey.
It is more common to hear of these ‘return to work’ stories for the FIRE – Financial Independence Retire Early movement. There is nothing like real life to teach you the real lessons on retirement funding and how to live a successful retirement. The post hits on a few of the essentials. We need a rich life filled with purpose.
On that, I continually take readers to The Retirement Manifesto.
Here’s a good follow for RBC investment summaries and more. On Telus they expect market leading growth and share price appreciation.
Telco has become a challenging slow-growth or no-growth space. I sold half of my Bell stock several weeks ago and moved the proceeds to XDU. I continue to hold all of my Telus.
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Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
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