Market Insights

Market update. Canadian economy heads north

October 17, 2017


Market update. Canadian economy heads north

Market Insights

Returns for the WealthBar Balanced ETF Portfolio were up 1.2% for September. Over a full year, we have seen a 10.2% return, notwithstanding moderate volatility over the spring and summer.

Canadian economy keeps purring along, which is a good thing for our portfolio

The Canadian economy is doing just fine, in part thanks to the pumped-up price of oil. It peaked at $52 in September, up from $47, which helped fuel growth in the S&P TSX 60, which was up 3.5% (higher than the S&P 500, showing the benefit of diversification).

As the Bank of Canada noted, “Recent economic data have been stronger than expected, supporting the Bank’s view that growth in Canada is becoming more broadly-based and self-sustaining.”

One of the reasons WealthBar’s portfolios performed well in September: our exposure to Canadian Preferred Shares (ZPR) and Canadian Equities (HXT).

Our investment portfolio did not see significant drawdowns when the interest rate went up to 1% because our fixed income was focused on short duration bonds and high-yield bonds. These factors combined to help us deliver a positive return.

USA weathers a storm and international markets see some sunny outcomes

Hurricane Harvey caused a swathe of destruction that damaged oil refinery capacity, which bumped up prices at the pump for both the USA and Canada.

But outside the maelstrom, it was relatively smooth sailing. The S&P 500 was up 2% for the month, hitting a record high — and was also up 14% year-to-date, partly driven by positive movement in the technology and manufacturing sectors.

Meanwhile, Japan and Europe have seen significant growth in the last month. The Nikkei was up 4.3% and Euro Stocks rose 5.2%.

There is enthusiasm over the election of Emmanuel Macron in France and re-election of Angela Markel in Germany. A renewal of leadership at the center of the EU may be an extra reason for investors to continue to place value in Europe, notwithstanding recent political tensions regarding Brexit, or in Spain vis a vis Catalonia.

What does all this mean for your investments?

Natural disasters aside, the markets had a good month in September. Investors in Canadian assets, in particular, are seeing the benefit of having a global balanced portfolio. This lets them improve diversification to lower risk while opening up opportunities for higher earnings.

Do you have questions about your investments at WealthBar? Set up a call to talk to your financial advisor, who can help you get the answers you need.

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