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 .
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.
|Name||Ticker||February 2019 Return||2019 YTD Return|
|Canadian Listed ETFs|
|BMO S&P/TSX Capped Composite Index ETF||ZCN||3.15%||12.12%|
|BMO MSCI EAFE Index ETF||ZEA||2.61%||5.21%|
|BMO MSCI Emerging Markets Index ETF||ZEM||-0.61%||5.02%|
|iShares Core Canadian Universe Bond Index ETF||XBB||-0.07%||1.28%|
|iShares Canadian Corporate Bond Index ETF||XCB||0.04%||1.71%|
|Vanguard Canadian Short-Term Corporate Bond Index ETF||VSC||0.35%||1.13%|
|iShares S&P/TSX Canadian Preferred Share Index ETF||CPD||1.60%||1.05%|
|Vanguard FTSE Canadian Capped REIT Index ETF||VRE||3.97%||12.38%|
|U.S. Listed ETFs|
|SPDR® S&P 500 ETF||SPY||3.20%||11.45%|
|Vanguard FTSE Developed Markets ETF||VEA||2.18%||9.68%|
|Vanguard FTSE Emerging Markets ETF||VWO||0.65%||9.25%|
|iShares Core U.S. Aggregate Bond ETF||AGG||-0.07%||1.01%|
|iShares iBoxx $ Investment Grade Corporate Bond ETF||LQD||0.02%||3.16%|
|Vanguard Short-Term Corporate Bond ETF||VCSH||0.39%||1.49%|
|iShares iBoxx $ High Yield Corporate Bond ETF||HYG||1.65%||6.43%|
|iShares U.S. Preferred Stock ETF||PFF||1.34%||6.25%|
|Fidelity® MSCI Real Estate ETF||FREL||0.74%||12.52%|
Source: Morningstar.ca NAV returns for ETFs; Bank of Canada Daily Exchange Rates for currency
Monthly Portfolio Activity
|February Balance||Beginning Value||Ending Value||Change ($)||Change (%)|
|CAD TFSA Total||$4,971.75||$4,994.95||$23.20||0.47%|
|USD RRSP Total||$5,160.02||$5,168.79||$8.77||0.17%|
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 Total||$4,994.95||42.32%|
|USD RRSP Total||$6,806.78||57.68%|
|Grand Total (CAD at $1.3169 per USD as of 2/28/2019)||$11,801.73||100.00%|
Performance and Contribution
|Shares||Beginning Price||Ending Price||Income||Return ($)||Return (%)||Contribution|
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.
No trades were placed in January.
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.