WEALTH Matters — SPRING 2012

INVESTMENT MARKET COMMENTARY

The first three months of 2012 were kind to most equity markets, but caused a rare quarterly loss for bonds. Government guaranteed bonds had been bid up in the last two quarters of 2011 for fear of the Eurozone unwinding and possible debt default by one or more of their weakest economies. Greece’s creditors ended up agreeing to a 54% writedown on its bonds, reducing the size of the remaining debt at risk, and increasing optimism that a default could be avoided. This reduced demand for ‘quality’ government debt and bond prices pulled back.

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The Canadian S&P/TSX index was up strongly in January and February, losing some ground in March but ending the quarter up 4.39%, making back almost half of its 9% loss in 2011. The pullback in gold, metals and mining continued to hold back the TSX, while strong gains were made in consumer discretionary, health care and financials. Canada’s strong overall employment gains in the first quarter underscore the strength of our domestic economy.

US equities continued their upward trend that has been in place since 2009, turning in over a 10% return for both small and large cap stocks for the quarter, and an impressive 14% annual average return over 3 years. Much of this is merely a recovery from the disastrous 2008, but it is reassuring to see the 6-year return is once again a positive number (since March 2006) and we are only 5% away from recovering all the value lost in 2008.

Global equity returns were strong overall outside North America, with developed markets returning over 9% and emerging markets over 12%. Emerging markets are now positive over all historical periods with all periods over 7 years having over 7% average annual compounded return, while developed markets have long term returns in the low single digits.

(PS—the eurozone debt crisis returned to the front burner in the second quarter with significant effects on stock and bond markets. Please let us know if you would like more regular information).

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Index Performance 2012 Mar. 31

3 Mos.

1 Yr.

2 Yrs.

3 Yrs.

4 Yrs.

5 Yrs.

10 Yrs.

15 Yrs.

20 Yrs.

Cash

 

 

 

 

 

 

 

 

 

Bank of Canada 91 day T-bill|1

0.22%

0.91%

0.80%

0.61%

0.97%

1.63%

2.31%

-

-

Fixed Income

 

 

 

 

 

 

 

 

 

DEX Bond Universe

-0.21%

9.74%

7.41%

6.65%

6.22%

6.13%

6.58%

-

-

DEX All Government

-0.80%

9.86%

7.42%

5.47%

5.70%

5.96%

6.45%

-

-

DEX Short Term Bond

0.03%

4.41%

3.89%

3.68%

4.47%

4.86%

4.92%

-

-

Canadian Equity

 

 

 

 

 

 

 

 

 

S&P/TSX Composite

4.39%

-9.76%

4.24%

15.59%

1.08%

1.65%

7.22%

7.37%

9.04%

S&P/TSX Small Cap

3.95%

-8.68%

8.91%

24.36%

4.08%

2.70%

8.39%

-

-

S&P/TSX Consumer Discretionary

14.02%

-1.87%

6.71%

14.63%

1.24%

-2.21%

1.80%

-

-

S&P/TSX Diversified Mining & Minerals

-3.30%

-26.36%

-2.32%

43.67%

7.97%

9.57%

23.24%

-

-

S&P/TSX Health Care

17.26%

13.34%

35.88%

39.89%

18.34%

9.31%

0.38%

-

-

S&P/TSX Real Estate Investment Trust

5.48%

11.79%

23.17%

38.63%

12.51%

6.28%

12.55%

-

-

US Equity

 

 

 

 

 

 

 

 

 

S&P 500 (CAD)

10.61%

11.59%

11.12%

14.23%

3.13%

-0.87%

-0.63%

3.82%

7.65%

Russell 2000 (CAD)

10.46%

2.62%

11.14%

17.45%

5.56%

-0.75%

1.59%

5.15%

7.82%

Global Equity

 

 

 

 

 

 

 

 

 

MSCI THE WORLD INDEX (CAD)

9.60%

3.38%

5.94%

11.28%

-0.75%

-3.50%

-0.06%

2.68%

5.92%

MSCI EUROPE (CAD)

8.86%

-4.32%

1.84%

9.52%

-5.06%

-6.12%

1.15%

3.55%

7.22%

MSCI EAFE (CAD)

8.91%

-3.12%

1.17%

8.41%

-4.39%

-6.23%

0.88%

1.98%

4.85%

MSCI EMERGING MARKETS (CAD)

12.13%

-5.95%

3.39%

16.08%

0.45%

2.01%

9.25%

5.17%

7.25%