Menu
COVID-19 & Your Finances Market Insights News

Market Update: What a Difference a Month Makes

May 21, 2020

author:

Market Update: What a Difference a Month Makes

COVID-19 & Your Finances Market Insights News

US, Canadian, and global equity markets staged an unprecedented rally in April from the March 23, 2020 lows. During the month, the Dow and S&P 500 both saw the largest monthly gains since 1987. Meanwhile, Canadian and global equity markets also followed the rally, closing well off their March 23, 2020 lows. 

The rally explained

From my perspective, the rally we’re seeing suggests that investors approve of the measures that global governments have taken to cushion the economic blow of the lockdowns, and are optimistic as countries start to ease restrictions

Generally, I believe that this government stimulus is a good thing: it should help keep many in their homes and out of bankruptcy, and low interest environments have historically been effective at stimulating demand during slowing economic times. These low interest environments also present some opportunities for investors, and, as we explain below, WealthBar is adjusting its portfolios in line with those opportunities.

Still, it’s too early to tell whether or not we’re seeing the beginning of true recovery and analysts are generally unanimous that recovery will be slow

Right now, we’re seeing a split between the economy and the stock market. While Wall Street investors are optimistic and stocks are rising, Main Street continues to feel the effects of the containment measures as unemployment rises and small businesses shut down. In part, that’s because the enormous companies that make up indices like the S&P 500 operate under vastly different circumstances and have far greater financial resources and reserves.

Now’s the time for cautious optimism, as so much remains uncertain. It’s not yet clear when, or how, the global economy can safely return to business as usual. 

In the coming months, investors will be looking to understand when it will be possible for businesses to reopen safely, and what happens if there’s a second wave of outbreaks as we ease lockdowns.

What does this mean for my WealthBar portfolio?

Enhancing our portfolios 

We’ve made some adjustments to our WealthBar ETF portfolios this month to align with our outlook of interest rates being lower for longer.

Specifically we:

  • Replaced the Vanguard Canadian Short-Term Corporate Bond ETF (VSC) with the BMO Mid Corporate Bond Index ETF (ZCM). 
  • Replaced Horizons Laddered Preferred ETF (HLPR) with a combination of the Horizons S&P/TSX 60 Index ETF (HXT) and the BMO Mid Corporate Bond Index ETF (ZCM).

ZCM is comprised of high-quality bonds that pay monthly distributions, and we’ve included it in the portfolios with the goal of generating higher yields and reducing volatility. Meanwhile, we’ve increased HXT, which is comprised of Canada’s largest companies, to increase geographic exposure in Canada.

How our portfolios are performing

WealthBar portfolios are diversified by design to help you take advantage of growth when the market is up, and minimize losses when the market is down. That’s reflected in our recent performance. 

According to Morningstar data, as of market close on April 30:

  • The S&P/TSX Composite Total Return Index closed up +10.8% for the month and was down -12.4% for the year to date.
  • Meanwhile, the WealthBar Aggressive ETF portfolio, which has the highest allocation in equities gained +8.9% in April and was down -7.7% for the year to date. 
  • The WealthBar Safety ETF which has the lowest weight in equities gained +4.8% in April and was down -1.7% for the year to date.

WealthBar’s Private Investment Portfolios, in particular have held relatively steady through the market turmoil. With mandates designed to enhance diversification and mitigate risk by using a larger range of asset classes, these private investments aren’t as exposed to the markets ups and downs. 

Performance*

Here’s how market trends affected WealthBar portfolios in April:

ETF Portfolios

April performance1-Year performance
ETF Safety Portfolio+4.84%+0.75%
ETF Conservative Portfolio+6.25%+0.09%
ETF Balanced Portfolio+7.81%-1.34%
ETF Growth Portfolio+8.39%-1.64%
ETF Aggressive Portfolio+8.85%-2.38%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.

Private Investment Portfolios

April performance1-Year performance
Safety Private Portfolio+2.63%+2.26%
Balanced Private Portfolio+4.09%+1.76%
Aggressive Private Portfolio+4.51%-1.42%

The composition of each portfolio and further information can be accessed by clicking the portfolio name.


*This is a hypothetical illustration of our portfolio performance as of the date noted above. The time-weighted performance is displayed in Canadian dollars and assumes daily rebalancing and the reinvestment of distributions. It is reflective of the model portfolio’s target holdings and weights including portfolio changes. The performance is net of the management expense ratios (MERs); however, does not include WealthBar’s management fee or taxes. Performance is annualized for all periods greater than one year. This performance may differ from clients’ actual account return due to the timing of deposits, withdrawals, buys and sells, and the reinvestment of distributions.

The performance provided is for informational purposes only and is not to be considered as investment advice. Portfolio performance is not guaranteed. The value of your investment can go down, up and change frequently. Past performance is not indicative of future returns. There may be significant differences between the investment portfolios that are not discussed here, including different investment objectives and risk factors. You should always consider, in any investment decision, your investment objectives, needs, circumstances, restrictions, tolerance for risk, financial goals and investment time frame.

Although WealthBar believes the obtained information provided from third-party sources to be reliable, WealthBar does not guarantee the information and disclaims any liability associated with the use of these performance results. Source: Morningstar Direct. For full details of calculation please contact: info@wealthbar.com.

A few minutes today could save you thousands tomorrow.
Start investing in under 5 minutes. No hold music. No paperwork.