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Trendlines

Trendlines show one year rolling returns on various classes of mutual funds from Jun 2009 to May 2010.

• Fixed Income
• Equity Markets
• Three Year Equity
  • May 06
  • May 05
  • May 04
  • May 03

Fixed Income

Key Canadian Bond Consumer Price Index 5 Year GIC Canadian Money Market International Bond

Canadian bond returns have fluctuated during the year and have included a mix shift towards more corporate bonds. The CPI inflation rate has fluctuated through the year but remains below the long term federal target of 2%. International bond returns for Canadians have ridden the foreign exchange rollercoaster for quite a while and, based upon the graph, are providing almost as much volatility as the stock market. 5 Year GIC rates and Money Market returns have trended downward through the year, with returns on the latter approaching zero.

Equity Markets

Key Canadian Equity European Equity US Equity Pacific Rim Equity International Equity

A precipitous market decline started in September 2008 and carried on through October that year. All of the world equity markets quickly dropped through the floor in that brief period, resulting in significant double-digit negative returns. The bottom hit in early March 2009. In the ensuing twelve months to February 2010, all of the markets were on a straight and steep rise to recapture much of those losses; thus, hitting significant double-digit positive returns. All of the markets have turned down in the three months following, reflecting the gains made in those same months in the prior year. Canadian and U.S. returns are the highest while Europe lags at almost zero.

 

Three Year Equity Trendlines to May 2006

Key Canadian Equity European Equity US Equity Pacific Rim Equity International Equity

Three Year Equity Trendlines to May 2005

Key Canadian Equity European Equity US Equity Pacific Rim Equity International Equity

Three Year Equity Trendlines to May 2004

The long hard ride referred to last year at this time was, as it turns out, indeed coming to an end a year ago. The middle of March 2003 marked the turnaround point. With only one setback last Fall, all of the regional equity markets were on a straight climb since March 2003. That run ran out of gas in February-March and all markets have turned down in the most recent quarter.

Canada's long run at the top came to an end early in 2004, to be replaced by European and Pacific Rim markets. Strong correlation of movement continues across the geographic markets.

Key Canadian Equity European Equity US Equity Pacific Rim Equity International Equity

Three Year Equity Trendlines to May 2003

It’s been a long, hard ride. The Trend-line graphs are presented quarterly in our newsletter and monthly on our website. The graphs show the one year rolling annual returns across various equity markets to, using the average annual return for mutual funds of each particular class.Here, we s-t-r-e-t-c-h out the graph to show three years, rather than just one.

This covers the period June 2000 to May 2003. The first few months show heady returns of 10-40% across most geographic markets. But most markets crossed the zero line in November 2000 and have stayed there defiantly ever since, with most annual returns in the –10% to –30% range. You will observe that the Canadian equity market has led the way throughout the three years, yielding the lead to Asian markets at only two points. You also will observe the close correlation of movement across all geographic zones through the three year period.

This graph simply and succinctly accounts for the prolonged and cumulative investor fatigue that many are experiencing. $100 invested in the US in June 2000 would have fallen to approximately $62 three years later. There was no geographic equity market where an investor could have escaped the bear. More comforting statistics for long-term investors is that over a 20 year period, the broad Canadian equity market has returned just over 8% annualized, the US market close to 13% and world markets 11%. Conventional wisdom of having patience and a well diversified stock portfolio still prevails in these volatile times.

Key Canadian Equity European Equity US Equity Pacific Rim Equity International Equity