WEALTH Matters — SUMMER 2013

INVESTMENT MARKET COMMENTARY

Most equity markets around the world posted negative returns in the second quarter on fears that the gradual withdrawal of US monetary stimulus would slow economic growth, but most remain strongly positive for the first half of 2013. In the graph below, the blue line shows the price movements of the Canadian TSX (blue line), US S&P500 (green line) and Global MSCI EAFE (red line) indices over the past 18 months. (Source: Yahoo Finance, July 2013)

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Investment Market Commentary

The Bernanke SCare of 2013

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The Canadian market was particularly hard-hit because of the declining gold price, down 25% so far this year, which impacted the materials sector. Gold miners make up 5% of the TSX60 index, and their decline has pulled the TSX into negative territory for the year.

Emerging markets are also in the red for the year, as the global pullback of the second quarter came after a flat first quarter.

The table below shows total returns for a number of stock and bond market indices across recent and longer time periods. (Source: Guardian Capital Advisors).

Investment markets often overreact to news like the US Federal Reserve’s comments on Quantitative Easing. Markets were already fretting about ‘tapering’ in the middle of the second quarter, which impacted bond markets temporarily but did not affect stock markets. In the days after the end of the second quarter, stock and bond markets are rebounding, signs they may have overreacted in the short term.

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The table below shows total returns for a number of stock and bond market indices across recent and longer time periods. (Source: Guardian Capital Advisors).

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Total Return C$ Jun 30 , 2013

1M

3M

6M

1Y

2Y

3Y

4Y

5Y

10Y

Canadian Fixed Income

 

 

 

 

 

 

 

 

 

90-day Treasury Bills

0.08%

0.24%

0.48%

1.00%

0.98%

0.95%

0.80%

1.03%

2.16%

Dex Short Term Bond

-0.56%

-0.57%

0.30%

1.36%

2.57%

2.77%

3.15%

4.11%

4.12%

Dex Universe Bond

-2.03%

-2.36%

-1.68%

-0.17%

4.55%

4.59%

5.16%

5.53%

5.34%

Dex High Yield

-1.43%

0.03%

1.64%

9.55%

4.69%

6.80%

10.53%

8.51%

7.69%

Canadian Equities

 

 

 

 

 

 

 

 

 

S&P/TSX Composite

-3.76%

-4.08%

-0.88%

7.90%

-1.60%

5.39%

6.99%

-0.53%

8.41%

S&P/TSX SmallCap

-4.48%

-7.35%

-6.76%

-1.02%

-10.77%

0.95%

9.11%

-1.77%

4.55%

S&P/TSX Equity Income

-1.84%

-1.03%

4.08%

12.94%

5.02%

11.98%

14.11%

6.33%

-

TSX Sectors

 

 

 

 

 

 

 

 

 

Cdn. Energy

-3.20%

-3.01%

-0.44%

6.60%

-9.62%

-0.89%

0.66%

-8.61%

8.86%

Cdn. Materials

-13.49%

-22.79%

-30.81%

-26.94%

-24.52%

-11.44%

-4.33%

-11.30%

8.26%

Cdn. Industrials

-2.25%

-0.09%

14.45%

27.31%

10.10%

16.47%

17.19%

7.32%

10.22%

Cdn. Consumer Discretionary

3.17%

8.64%

22.31%

31.88%

12.87%

13.61%

15.53%

9.03%

7.11%

Cdn. Consumer Staples

3.33%

8.77%

14.91%

29.43%

19.84%

22.12%

15.53%

12.87%

7.43%

Cdn. Health Care

7.02%

11.24%

28.06%

21.25%

19.23%

29.33%

33.82%

21.36%

4.11%

Cdn. Financials

-0.85%

0.89%

5.46%

18.53%

5.86%

10.05%

10.19%

6.55%

9.30%

Cdn. Information Technology

-5.89%

2.59%

19.00%

36.40%

-0.36%

4.75%

5.56%

-1.27%

5.09%

Cdn. Diversified Metals & Mining

-14.82%

-18.69%

-29.59%

-17.55%

-28.77%

-2.81%

4.52%

-3.05%

19.88%

Cdn. Real Estate

-3.41%

-3.32%

-1.10%

4.29%

8.50%

16.33%

21.50%

8.96%

11.92%

Global Gold

-16.86%

-32.74%

-43.17%

-43.01%

-30.67%

-22.72%

-13.36%

-12.76%

0.95%

US Equities

 

 

 

 

 

 

 

 

 

S&P 500 (LargeCap)

0.31%

6.51%

20.26%

24.40%

17.74%

18.10%

14.51%

7.69%

4.60%

Russell 2000

1.15%

6.69%

22.41%

28.12%

15.14%

18.32%

16.40%

9.46%

6.78%

Global Equities

 

 

 

 

 

 

 

 

 

MSCI World (Net)

-0.83%

4.17%

14.56%

22.32%

10.82%

13.38%

10.02%

3.35%

4.55%

MSCI EAFE (Net)

-1.94%

2.49%

9.99%

22.37%

5.56%

9.72%

6.29%

0.00%

4.97%

MSCI Europe

-3.21%

3.36%

8.50%

23.34%

4.70%

10.90%

7.25%

-0.09%

5.39%

MSCI Japan

3.46%

8.07%

23.23%

26.30%

11.37%

8.48%

4.11%

0.64%

3.70%

MSCI EM (Emerging Markets)

-4.75%

-4.73%

-4.27%

6.48%

-2.59%

3.41%

5.65%

0.52%

11.16%