WEALTH Matters — Winter 2011-2012

INVESTMENT MARKET COMMENTARY

2011 was a year of high volatility for investment markets. Ongoing concerns about European and US government debts and slowing global growth reduced earnings expectations for corporations, and set back equity markets around the world (see the table below).

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Cash returns from Treasury Bills remained at historic lows, and much capital moved to the perceived safety of bonds, especially those issued by fiscally sound governments. The Canadian S&P/TSX index was off almost 9% on the year, pulled back by declines in resource and mineral prices, which could not offset the strength of the Real Estate Investment Trust sector, up over 20%. Reduced growth expectations also pulled down equities globally by about 3%, mainly due to large drawdowns in Europe and in the emerging markets. Despite government debt issues, the US economy continues its recovery in employment and corporate profitability, with various indices showing 4% gains in both small and large cap equities, with particular strength in industrials. US and global equity returns remain near a 0 average over the past 10 years. By some measures, equities are considered historically cheap.

Please call or email us, or use our askpage form to request a copy of our more detailed Investment Markets Commentary.

(PS—in the first 2 months of 2012, Canadian and Global indices have each recovered about 6% from their year-end values. Please let us know if you would like more regular information).

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Index Performance (2011 Dec 31)

1 Year

2 Year

3 Year

4 Year

5 Year

10 Year

Cash

 

 

 

 

 

 

Bank of Canada 91 day T-bill

0.92%

0.75%

0.60%

1.02%

1.63%

2.25%

Fixed Income

 

 

 

 

 

 

DEX Bond Universe

9.67%

8.20%

7.26%

7.05%

6.37%

6.49%

DEX All Government

10.20%

8.34%

6.03%

6.77%

6.30%

6.40%

DEX Short Term Bond

4.65%

4.11%

4.25%

5.31%

5.07%

4.81%

Canadian Equity

 

 

 

 

 

 

S&P/TSX Composite

-8.71%

3.62%

13.18%

-0.72%

1.30%

7.03%

S&P/TSX Small Cap

-16.43%

6.26%

22.39%

-0.01%

0.17%

5.56%

S&P/TSX Capped REIT

21.67%

22.14%

32.31%

9.35%

6.17%

10.37%

S&P/TSX Precious Metals & Minerals

-30.23%

13.80%

27.29%

-0.81%

-2.81%

6.79%

S&P/TSX Capped Energy

-9.90%

1.11%

12.55%

-1.48%

0.38%

12.58%

US Equity

 

 

 

 

 

 

S&P 500 (CAD)

4.41%

6.63%

7.45%

-1.00%

-2.93%

-1.60%

Dow Jones Industrial Average (CAD)

11.07%

9.58%

7.77%

1.61%

-0.32%

-0.03%

Russell 1000 (CAD)

4.02%

6.99%

7.67%

-0.65%

-2.65%

-1.15%

Global Equity

 

 

 

 

 

 

MSCI THE WORLD INDEX (CAD)

-2.67%

1.80%

4.80%

-3.73%

-4.41%

-0.43%

MSCI EUROPE (CAD)

-8.29%

-4.70%

1.81%

-8.15%

-7.14%

0.28%

MSCI EAFE (CAD)

-9.55%

-3.68%

1.43%

-7.15%

-6.79%

0.50%

MSCI EMERGING MARKETS (CAD)

-16.15%

-2.67%

12.93%

-4.17%

0.00%

9.18%

Source: Renaissance Investments, January 2012