WEALTH Matters — WINTER 2012

INVESTMENT MARKET COMMENTARY

The fourth quarter of 2012 brought generally strong equity market performance around the globe on the heels of a positive third quarter. The exceptions were materials and energy sectors, (and the Canadian small-cap market which is overweight in these sectors) continuing to suffer under declining commodity prices. The Healthcare sector in Canada finally took a breather in Q4 after several years of outperformance.

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RRSP vs TFSA

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Investment Market Commentary

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RRSP vs TFSA

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The Canadian S&P/TSX index was up over 7% for the year. This was a welcome change from 2011’s losses, but was not enough to produce a positive 2-year return. Energy and materials prices continue to hold back the market while consumer and industrial sectors recovered strongly from their poor 2011 showing.

US equities continued their steady climb since 2008. Large caps declined in the aftermath of the US election in early November, on fears of government deadlock on balancing the budget. Markets rallied in December for a marginally positive quarter, and a strongly positive year over 13%. The US budget deficit issue is not resolved, however, and will likely resurface to weigh on markets again in the first half of 2013, though high corporate profitability and cash levels should support the market.

European equity returns led the world in the quarter, and on the year, finally bouncing back after several years of sovereign debt woes, which continue in the southern countries and limit economic growth in the entire region. Emerging markets had a strong finish to a banner year, recovering most of 2011’s large losses as markets accept that China’s new normal growth rate may remain in the single digits, with other Asian economies bolstering regional growth.

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Total Return in Cdn$ - Dec. 31, 2012

1M

3M

1Y

2Y

3Y

4Y

5Y

10Y

15Y

Cash and Bonds

 

 

 

 

 

 

 

 

 

91-Day T-Bills

0.10%

0.29%

1.01%

1.01%

0.85%

0.79%

1.29%

2.26%

 

DEX Universe Bond

-0.13%

0.30%

3.60%

6.59%

6.64%

6.33%

6.35%

5.97%

 

DEX Short Term Bond

-0.03%

0.34%

2.01%

3.32%

3.40%

3.68%

4.64%

4.38%

 

DEX High Yield

0.79%

3.50%

14.75%

5.89%

8.90%

9.52%

8.44%

8.38%

 

Canadian Equities

 

 

 

 

 

 

 

 

 

S&P/TSX Composite

1.95%

1.72%

7.19%

-1.08%

4.79%

11.65%

0.81%

9.22%

6.51%

S&P/TSX Completion

1.93%

-0.02%

4.75%

-1.75%

7.95%

16.74%

2.60%

10.13%

 

S&P/TSX SmallCap

2.40%

-1.99%

-2.23%

-9.60%

3.35%

15.71%

-0.46%

5.70%

 

S&P/TSX Sectors

 

 

 

 

 

 

 

 

 

Cdn. Energy

0.07%

-3.58%

-4.83%

-9.95%

-3.24%

6.41%

-3.81%

9.65%

 

Cdn. Materials

0.01%

-6.65%

-5.67%

-13.79%

0.49%

8.02%

0.02%

11.07%

8.04%

Cdn. Industrials

4.59%

8.05%

15.90%

7.72%

10.62%

14.44%

4.73%

8.86%

5.20%

Cdn. Consumer Discretionary

4.01%

5.62%

22.05%

1.59%

8.99%

10.51%

-0.74%

5.44%

4.60%

Cdn. Consumer Staples

5.87%

9.21%

22.58%

14.40%

13.22%

12.26%

8.44%

6.89%

10.84%

Cdn. Health Care

1.84%

-3.88%

14.71%

15.69%

24.69%

26.70%

13.96%

3.47%

1.62%

Cdn. Financials

2.15%

6.79%

17.14%

6.13%

6.92%

15.53%

2.72%

9.83%

 

S&P/TSX Cdn. Income Trust

4.17%

2.23%

17.13%

20.25%

22.36%

27.05%

14.00%

16.44%

14.91%

S&P/TSX Cdn. REIT

4.05%

0.89%

16.97%

19.30%

20.39%

28.29%

10.83%

13.47%

13.05%

US Equities

 

 

 

 

 

 

 

 

 

S&P 500 (LargeCap)

1.08%

0.76%

13.49%

8.85%

9.02%

8.78%

1.80%

2.26%

1.98%

Russell 2000

3.74%

3.02%

13.83%

5.61%

10.37%

9.95%

3.70%

4.76%

3.37%

Global Equities

 

 

 

 

 

 

 

 

 

MSCI World (Net)

2.11%

3.80%

14.01%

5.23%

5.74%

7.22%

-0.46%

3.20%

2.20%

MSCI Europe

3.00%

8.28%

17.33%

3.62%

2.16%

5.67%

-3.59%

4.05%

2.69%

MSCI EAFE (Net)

3.39%

7.82%

15.34%

2.03%

2.30%

4.92%

-3.08%

3.79%

2.29%

MSCI EM (Emerging Markets)

5.08%

6.82%

16.05%

-1.46%

3.23%

13.90%

-0.48%

11.60%

6.64%