November provided some welcome relief after the losses endured in October. Notable events include:
U.S. midterm election results came in as expected on November 6, with the Democrats gaining control of the House and the Republicans keeping the Senate.
Oil prices fell into a bear market and then some, sparking renewed production cut talks.
Prices are roughly double those of the early 2016 lows, but this most recent move still represents a sharp decline.
|Name||Ticker||November 2018 Return||2018 YTD Return|
|Canadian Listed ETFs|
|BMO S&P/TSX Capped Composite Index ETF||ZCN||1.38%||-3.67%|
|BMO MSCI EAFE Index ETF||ZEA||1.18%||-3.59%|
|BMO MSCI Emerging Markets Index ETF||ZEM||5.37%||-7.20%|
|iShares Core Canadian Universe Bond Index ETF||XBB||1.03%||-0.06%|
|iShares Canadian Corporate Bond Index ETF||XCB||0.39%||-0.41%|
|Vanguard Canadian Short-Term Corporate Bond Index ETF||VSC||0.25%||0.49%|
|iShares S&P/TSX Canadian Preferred Share Index ETF||CPD||-5.98%||-6.91%|
|Vanguard FTSE Canadian Capped REIT Index ETF||VRE||1.66%||5.80%|
|U.S. Listed ETFs|
|SPDR® S&P 500 ETF||SPY||2.03%||4.98%|
|Vanguard FTSE Developed Markets ETF||VEA||0.40%||-9.66%|
|Vanguard FTSE Emerging Markets ETF||VWO||4.48%||-11.98%|
|iShares Core U.S. Aggregate Bond ETF||AGG||0.59%||-1.83%|
|iShares iBoxx $ Investment Grade Corporate Bond ETF||LQD||-0.32%||-5.36%|
|Vanguard Short-Term Corporate Bond ETF||VCSH||0.01%||0.12%|
|iShares iBoxx $ High Yield Corporate Bond ETF||HYG||-0.51%||0.29%|
|iShares U.S. Preferred Stock ETF||PFF||-2.20%||-3.30%|
|Fidelity® MSCI Real Estate ETF||FREL||4.73%||3.74%|
Source: Morningstar.ca NAV returns for ETFs; Bank of Canada Daily Exchange Rates for currency
Monthly Portfolio Activity
|November Balance||Beginning Value||Ending Value||Change ($)||Change (%)|
|CAD TFSA Total||$5,000.00||$5,003.55||$3.55||0.07%|
|USD RRSP Total||$5,012.41||$5,043.77||$31.36||0.63%|
Income was earned from PFF (pays monthly) and CPD (pays monthly).
Current Portfolio Allocation and Balance
|Current Value (In CAD)||Current Allocation|
|CAD TFSA Total||$5,003.55||42.72%|
|USD RRSP Total||$6,708.72||57.28%|
|Grand Total (CAD at $1.3301 per USD as of 11/30/2018)||$11,712.27||100.00%|
Performance and Contribution
|Shares||Beginning Price||Ending Price||Income||Return ($)||Return (%)||Contribution|
Portfolio holding iShares U.S. Preferred Stock ETF (PFF) had a poor month, and the timing of the add-on purchase of 20 shares on October 3 proved early. Fortunately, Fidelity MSCI Real Estate ETF (FREL) and Vanguard FTSE Emerging Markets ETF (VWO) delivered strong returns in November, more than offsetting the decline in PFF.
The Canadian dollar weakened again relative to the U.S. dollar, not surprising given the drop in oil prices. As a result, the Portfolio received a boost from translating the USD-denominated ETF holdings and cash held in the RRSP portion of the Portfolio at a higher exchange rate.
After calling out Canadian preferred shares last month as a potential asset class to add, on November 26 the opportunity arose to purchase 100 shares of iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) at $12.85.
It was a relief to put some of the untouched CAD TFSA cash balance to work into CPD. As mentioned in the October update, international stocks are close to attractive valuations and could be the next purchase. Otherwise, it feels appropriate to wait and see how the near future unfolds and to patiently await the next opportunity.
The CanETF Portfolio is not meant to be taken as investment advice. Please conduct due diligence on any ETF investment you are considering, including but not limited to a review of the prospectus, underlying benchmark methodology (if applicable), portfolio characteristics, holdings, performance since inception, role in your existing portfolio, and outlook for future performance.