2013 Review
Performance in 2013 (barring any last minute surprises) should be good. Perhaps, even very good.
International mutual funds could very well be the star of the show. Generally, you should see some really good returns in this sector over the last 12 months.
Our domestic Canadian equity funds? They may be OK perhaps but they are not exactly “shooting out the lights” at the moment. Canada’s stock market has not kept up with the U.S. stock market. Be aware that many Canadian equity funds (or funds classified as Canadian) may have large international stock holdings so some Canadian funds will get a considerable “lift” due to their high foreign content.
The lofty Canadian dollar has plummeted to the $ 0.94 mark at time of writing. Although this is bad news for Canadians planning a winter trip to warmer climes, we may console ourselves by saying that a cheap Canadian dollar should give our exports a bit of a boost.
Emerging markets appear to be recovering strongly from their summertime lows. European markets have done especially well over the past couple of years as the EU continues its recovery.
The retail investor is starting to show a tentative interest in the stock markets – some 5 years after the U.S. Financial Crisis of 2008.
The U.S. Federal Reserve Bank is still in “easy money” mode which means they are not anxious to raise interest rates any time soon.
Five year mutual fund rates of return are making big increases, as returns start to be measured from the low point in the markets between October 2008 and March 2009.
The real estate crash in Canada has definitely not arrived as housing prices are still increasing at a rate of several percent in the last year.
Canadian Financial Advisers are wondering if the regulators will ban commissions. The Australians figure the cost to convert to a fee structure was not too far under $2 billion Australian Dollars. I am still wondering if converting from a 1% commission to a 1% fee for a similar staggering cost makes economic sense for Canadian investors.
In a surprise move, some Canadian mutual fund companies have significantly reduced the cost of their funds in the do-it-yourself (DIY) channel for investors investing at discount brokerage firms.
If you have bonds in your portfolio or mutual funds containing bonds, rates of return may have dropped or stalled in 2013. Whether this poorer relative performance will trigger a massive exodus (The Great Rotation) out of bonds into stocks is an interesting question.
Overall, 2013 was a very good year. Client psychology made a major turn in 2013 as many investors shook off the fog of uncertainty and became a bit more optimistic.
Keep in mind that we have at least four out five outstanding years and stock markets (S&P 500) are some 160% above their lows in 2009.[1] Wow. That is some recovery!
Be aware though, we have not had any meaningful correction in the markets for a long period of time. So make sure you meet with your adviser and do a thorough review to ensure that you do not have too much stock exposure in your mutual fund portfolio.
Don’t wait too long. Make that appointment with me today!
For portfolio reviews, you can email me at gszlagowski@assante.com or call me directly at 519.744.3020 to make an appointment.
[1] Source: http://www.1stock1.com/1stock1_141.htm
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The opinions expressed are those of the author and not necessarily those of Assante Financial Management Ltd.
