June 2016 Investment Market Update
Much of the focus in June was on Brexit and you can read our commentary following the referendum in our special interim market update. Brexit had immediate effects on global markets. We don’t know how it will shape the global economy but expect volatility to persist while the exit strategy is mapped out and implemented.
Prior to the UK referendum, the US Federal Open Market Committee (Fed) met this month and held rates steady. Janet Yellen who chairs the committee was quick to report that they will be proceeding cautiously in raising the federal funds rate to watch the progress of inflation. Growth is picking up, US unemployment rates are at their lowest since 2007, wages have been slow to increase, and inflation is still lagging.
With the Fed and the Bank of Canada holding steady on rates and the Bank of England and European Central Bank set to support liquidity,we anticipate a persistent low-interest rate environment.
Canadian REITs continued to see headwind, returning 6% in June. REITs benefit from the increased demand for yield paying investments in a low-interest rate environment. Low-interest rates allow for REITs to seek new financings and increasing the prospect of more acquisitions moving the market up. We are also seeing REITs strengthening their corporate governance.
High yield bonds and preferred shares were also sought out for their cash flow and returned 1% and 4% respectively this month.
We continue to observe in times of volatility when equity markets decline and central bank actions are not as expected a movement to government and investment grade corporate bonds both of which had positive returns this month.
We usually choose not to focus on short-term results and encourage our client to practice good investor behavior and invest for the long term. However, this month following Brexit we had inquiries as to how our portfolios performed. For the month of June, all of our portfolios had positive returns. Below is table showing our Balanced ETF and Private Investment Portfolio alongside major global indices:
|Portfolio/Index||Change in June 2016|
|WealthBar Balanced ETF Portfolio||+1.02%|
|WealthBar Balanced Private Investment Portfolio||No Change|
|Euro Stoxx 50||-6.07%|
Hoping someone will watch your back and keep you on track with your investments? That’s why we created WealthBar. Book a free consultation call with an advisor when you sign up. They’ll help you get invested and make sure you’re on the right track.
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.