The recovery in the North American equity markets, which began two years ago in March 2009, continued to advance through the first quarter of 2011. Despite unfolding political turmoil in several North African countries and the natural disaster in Japan, the upward trajectory of both the global economy and financial markets was uninterrupted.
During the first quarter of 2011, the S&P/TSX Index in Canada delivered a total return of 5.6%, outperforming the S&P 500 in the United States, which was up 3.5% (in Canadian dollars). Since the stock markets hit bottom on March 9th, 2009, the Canadian market has provided an annualized rate of return of almost 31%, eclipsing U.S. performance of 16% (again, in Canadian dollars). As strong as this performance has been, the broad indexes have yet to make it back to their peaks of mid-2008.
The domestic stock market, while performing well, is being led by a couple of sectors. Similar to the run-up to the 2008 market peak, the Canadian market is being dominated by Financials (28%), Energy (28%) and Materials (23%). Leave out the almost 80% combined weighting of our banks and resource companies, and there’s not much left! This is why, when we properly diversify portfolios, we look outside the country to strengthen our exposure to the industrial, health care, consumer and technology sectors. With the Canadian dollar now trading at a premium to the U.S. currency, we believe that we have an ideal opportunity to invest in world class companies at a discount. This is a rare event for Canadian investors, and we will do our best to take advantage of it.
April 2011
The recovery in the North American equity markets, which began two years ago in March 2009, continued to advance through the first quarter of 2011. Despite unfolding political turmoil in several North African countries and the natural disaster in Japan, the upward trajectory of both the global economy and financial markets was uninterrupted.
During the first quarter of 2011, the S&P/TSX Index in Canada delivered a total return of 5.6%, outperforming the S&P 500 in the United States, which was up 3.5% (in Canadian dollars). Since the stock markets hit bottom on March 9th, 2009, the Canadian market has provided an annualized rate of return of almost 31%, eclipsing U.S. performance of 16% (again, in Canadian dollars). As strong as this performance has been, the broad indexes have yet to make it back to their peaks of mid-2008.
The domestic stock market, while performing well, is being led by a couple of sectors. Similar to the run-up to the 2008 market peak, the Canadian market is being dominated by Financials (28%), Energy (28%) and Materials (23%). Leave out the almost 80% combined weighting of our banks and resource companies, and there’s not much left! This is why, when we properly diversify portfolios, we look outside the country to strengthen our exposure to the industrial, health care, consumer and technology sectors. With the Canadian dollar now trading at a premium to the U.S. currency, we believe that we have an ideal opportunity to invest in world class companies at a discount. This is a rare event for Canadian investors, and we will do our best to take advantage of it.