CanETF Portfolio February 2019 Update: More Gains

Market Highlights

In February, markets mostly built onto a strong start to the year. 2019 has so far been quite friendly to risk assets, and last year’s concerns over a looming recession are seemingly nowhere to be found.

A big part of the shift in sentiment can be attributed to dovish turns from central bankers, most notably the U.S. Federal Reserve. Minutes from the January 29-30 meeting (released February 20) were consistent with that pivot. Perhaps the most interesting tidbit was a comment on the balance sheet unwinding: “Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year”. Just recently, this balance sheet runoff has taken the Fed’s assets to under $4 trillion .

Fed Total Assets 2272019

Meanwhile, the U.S.-China trade dispute appears to have made favourable progress in February, including the postponing of U.S. tariffs that were set to rise from 10% to 25% on March 1. Reuters has some interesting charts on the topic.

NameTickerFebruary 2019 Return2019 YTD Return
Canadian Listed ETFs
BMO S&P/TSX Capped Composite Index ETFZCN3.15%12.12%
BMO MSCI EAFE Index ETFZEA2.61%5.21%
BMO MSCI Emerging Markets Index ETFZEM-0.61%5.02%
iShares Core Canadian Universe Bond Index ETFXBB-0.07%1.28%
iShares Canadian Corporate Bond Index ETFXCB0.04%1.71%
Vanguard Canadian Short-Term Corporate Bond Index ETFVSC0.35%1.13%
iShares S&P/TSX Canadian Preferred Share Index ETFCPD1.60%1.05%
Vanguard FTSE Canadian Capped REIT Index ETFVRE3.97%12.38%
U.S. Listed ETFs
SPDR® S&P 500 ETFSPY3.20%11.45%
Vanguard FTSE Developed Markets ETFVEA2.18%9.68%
Vanguard FTSE Emerging Markets ETFVWO0.65%9.25%
iShares Core U.S. Aggregate Bond ETFAGG-0.07%1.01%
iShares iBoxx $ Investment Grade Corporate Bond ETFLQD0.02%3.16%
Vanguard Short-Term Corporate Bond ETFVCSH0.39%1.49%
iShares iBoxx $ High Yield Corporate Bond ETFHYG1.65%6.43%
iShares U.S. Preferred Stock ETFPFF1.34%6.25%
Fidelity® MSCI Real Estate ETFFREL0.74%12.52%
USD/CAD0.19%-3.47%

Source: Morningstar.ca NAV returns for ETFs; Bank of Canada Daily Exchange Rates for currency

Monthly Portfolio Activity

February BalanceBeginning ValueEnding ValueChange ($)Change (%)
CAD TFSA
Cash$3,724.75$3,729.95$5.20
CPD$1,247.00$1,265.00$18.00
CAD TFSA Total$4,971.75$4,994.95$23.200.47%
USD RRSP
Cash$2,377.82$2,384.59$6.77
PFF$1,446.40$1,448.00$1.60
VWO$835.60$832.40($3.20)
FREL$500.20$503.80$3.60
USD RRSP Total$5,160.02$5,168.79$8.770.17%
CAD Total$11,754.08$11,801.73$47.650.41%

iShares U.S. Preferred Stock ETF (PFF) and iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) paid out a distribution each. Both ETFs pay monthly.

Current Portfolio Allocation and Balance

 Current Value (In CAD)Current Allocation
CAD TFSA
Cash$3,729.9531.61%
CPD$1,265.0010.72%
CAD TFSA Total$4,994.9542.32%
USD RRSP
Cash$3,140.2726.61%
PFF$1,906.8716.16%
VWO$1,096.199.29%
FREL$663.455.62%
USD RRSP Total$6,806.7857.68%
Grand Total (CAD at $1.3169 per USD as of 2/28/2019)$11,801.73100.00%

Performance and Contribution

 SharesBeginning PriceEnding PriceIncomeReturn ($)Return (%)Contribution
PFF40$36.16$36.20$0.169350$8.370.58%0.07%
CPD100$12.47$12.65$0.052$23.201.86%0.20%
VWO20$41.78$41.62$0.0000($3.20)-0.38%-0.03%
FREL20$25.01$25.19$0.000$3.600.72%0.03%

The CanETF Portfolio experienced solid performance from the ETF holdings and a small boost from the Canadian dollar weakening relative to the U.S. Dollar.

Trade Summary

No trades were placed in January.

Looking Ahead

Very little has changed in the past month to alter the attractiveness of various asset classes. The status quo of patiently waiting for opportunities continues.

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.

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