July 2013 Market Recap

Third quarter starts off strong

The third quarter started off well with gains in both stocks and bonds. Worries over higher interest rates took a back seat to improving economic fundamentals both at home and abroad.

In Canada, the S&P/TSX Composite Index rose by 3.2%, led by strong gains in gold companies, consumer staples and financials. Gold rallied by more than 7.3% on expectations that the low interest rate environment may fuel future inflation. I don’t expect that this gold rally is sustainable given that there are no meaningful signs of inflation on the horizon.

U.S. and global equities also showed strong gains, with the S&P 500 rallying 5% in U.S. dollar terms, while the MSCI EAFE gained 5.3%. For Canadian investors, a falling U.S. dollar muted those gains. Investors celebrated stronger than expected economic growth, improving job numbers, benign inflation and strong consumer demand. Many were also encouraged by comments made by Ben Bernanke, the Chairman of the U.S. Federal Reserve reinforcing that tapering does not mean tightening. He reiterated that while bond buying would slow or stop, interest rates would not move higher until certain employment and inflation thresholds were breached. Given the current outlook, it may be many months before that happens.

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July Fund Ranking Report

Each month, we analyze more than 1200 mutual funds, pooled funds, and hedge funds putting them through our proprietary quantitative valuation model. We then prepare our Monthly Fund Ranking Report which rates and ranks each of the funds in our universe.

You can download our July 2013 Investment Fund Ranking Report here.

July Socially Responsible Investing Report 

With environmental and human rights concerns becoming more important to people, interest in the Socially Responsible Investing segment has never been stronger. In an effort to help keep investors and advisors informed on the SRI funds available, we have created our monthly Socially Responsible Investing Fund Report, which will be published on a monthly basis.

You can download the July 2013 Socially Responsible Investing Report here.

July WRAP Funds Report 

Fund of Fund or WRAP funds have consistently led the mutual funds sales stats in the past few years. Investor and advisor interest in the products are at an all time high, given the unprecedented levels of market volatility and uncertainty that is prevalent in the markets today. To help you zero in on the best WRAP funds available, we have created our new Monthly WRAP Funds Report that will be published on a monthly basis. If there is a WRAP fund that you would like to see added to this report, please contact us and we will add it for our next edition.

You can download the July 2013 WRAP Fund Report here.

Portfolio Review 

With investor worries over higher rates pushed to the backburner, the portfolios all posted respectable gains. The Growth Portfolio  led the pack, gaining 2.8%, handily outpacing its benchmark thanks to strong showings from the Renaissance Global Healthcare Fund, Trimark U.S. Small Companies Fund, and the Mackenzie   Ivy Foreign Equity Fund. Year to date, the portfolio is up more than 15%.

At the other end of the risk scale, our Conservative Portfolio gained 1%, doubling the return of its benchmark. It was again the Ivy Foreign Equity and healthcare fund that were the biggest contributor to its outperformance. So far this year, the portfolio has gained more than 4%.

The portfolios continue to deliver risk adjusted returns that are significantly stronger than their respective benchmarks. Their absolute return levels are well within our expected ranges based on the risk reward profile of each portfolio.
You can download our detailed Portfolio Review here.