Trendlines

Trendlines show one year rolling returns on various classes of mutual funds from November 2012 to October 2013.

Fixed Income

Fixed Income 2013
Key
Canadian Bond
Consumer Price Index
5 Year GIC
Canadian Money Market
International Bond

The global equity markets have left bondholders holding an empty bag. For now, the wisdom of carrying a bond portfolio must look to a future cycle in the economy when stocks tumble and the security of bond capital allows one to sleep more soundly.
Canadian bond returns have been shifting in response to changing inflation expectations. International bond returns largely have followed the direction of Canadian returns, both of which have been falling throughout the year. 5 Year GIC rates and Money Market returns have remained flat and low through the year, with returns on the latter approaching zero. The CPI inflation rate has remained significantly under the 2% target fall year, hovering close to 1%.

World Equity Markets

World Equity Markets 2013
Key
Canadian Bond
Consumer Price Index
5 Year GIC
Canadian Money Market
International Bond

Up, up and away! was the direction of world equity markets in 2013. While the directions have generally been in sync month-to-month, the amplitudes of the returns have been hugely diver-gent. Europe and the US have taken turns leading the way throughout the year, both posting significant double digit returns. Canada has brought up the rear all year, with what appear to be modest returns by comparison. Asian and global returns have fallen in between. All of the regions have been on a consistent, and steep, upward trend since August.

Fixed Income

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

Canadian bond returns have been dropping in response to changing inflation expectations. Rising interest rates have dropped the price, and current yields, of bonds…now in negative territory since the summer! International bond returns have followed the direction of Canadian returns, both of which have been falling since the Spring, and now hover around zero! 5 Year GIC rates and Money Market returns have remained flat and low through the year, with returns on the latter approaching zero. The CPI inflation rate has remained well under the 2% target all year.

World Equity Markets

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

It has been a heady ride for one year equity returns, most of which broke through a 21 month period of negative returns, commencing in the Summer of 2012. European returns have led the way throughout the year, in recovery from their crisis in the summer of 2010. U.S. returns lagged Europe through the year but caught up in October. Canada has brought up the rear, nonetheless with double-digit returns. All the regional markets have directionally followed each other.

Three Year Equity Trendlines to May 2010

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

Three Year Equity Trendlines to May 2009

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

Three Year Equity Trendlines to May 2008

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

Three Year Equity Trendlines to May 2007

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

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