July 2016 Investment Market Update
July was a good month for WealthBar clients as equity markets around the world exhibited good performance.
In Canada, the TSX Composite was up 3.9%. South of the border the S&P500 was up 3.7% and internationally the MSCI EAFE was up 5.5%.
The Canadian market had its best performance since March of this year despite data showing Canada’s gross domestic product contracted at the fastest pace in more than seven years in May after wildfires curbed Alberta oil production. Energy and precious metal producers made up most of the gains for the month.
The US market advanced as a result of better-than-forecast earnings and weakening odds of a Federal Reserve interest rate increase. Tech stocks like Alphabet Inc., eBay Inc., and Microsoft Corp. led the way.
Global markets were supported by better-than-estimated corporate earnings, improving economic data and optimism central banks will stay supportive of growth.
July was a solid month for preferred shares with Canadian Preferred Index return 4% on a total return basis. Recent gains have been steady and driven by consistent demand since the BoC confirmed that its overnight rate would remain fixed at 0.50% for the foreseeable future. We expect the preferred credit environment to become more stable as commodity prices and the Canadian economy recover.
High yield was up 2.5% last month. The low-interest rate environment make high-yield an attractive asset class, and upswings in the stock market instill greater confidence in the market as a whole. When stocks move up or down, the high yield bond market tends to move in lockstep.
Although July was a positive month across all asset classes in our portfolios and market volatility decreased we continue utilizing a healthy diversified strategy.
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Neville Joanes is the Portfolio Manager & CCO at WealthBar. Neville oversees portfolio management and investment operations, ensuring that clients’ portfolios meet their objectives. He is dedicated to his goal of always delivering the best investment management to our clients. Neville is also a CFA® charter holder.