Once the dust settled on the results of the Brexit vote, calmer heads prevailed, and investment markets moved higher in July, recovering most of their recent losses. It was an equally strong month for the portfolios, with each finishing well into positive territory.
For a review of the portfolios’ performance, you can download our standard monthly portfolio report here. For those looking for even more detail, I am also providing additional reports generated from Morningstar which show even more detail regarding the portfolios. A summary report can be downloaded here, while the more detailed report can be downloaded here.
Not surprisingly, it was our Growth Portfolio that had the strongest gains, rising by more than 4.5%, and modestly outpacing its benchmark. Most of the outperformance was driven by a strong showing from the TD U.S. Blue Chip Equity Fund, which handily outpaced the S&P 500 on the strength of its consumer and healthcare names.
Our Conservative Portfolio was positive, gaining 1.4%, but lagging its benchmark. The underperformance was the result of underperformance from the Fidelity Canadian Large Cap Fund, and the Mackenzie Ivy Canadian Fund. Both had decent months, but were held back by the conservative positioning and higher cash balances. Another laggard was the Dynamic Advantage Bond Fund, which lagged the benchmark due to its shorter duration positioning, which muted gains in a falling interest rate environment.
Looking ahead, I continue to believe each of the portfolios is well positioned for the market environment. The Dynamic Advantage Bond Fund is perhaps a touch too conservative for the near term, as it is unlikely interest rates will be moving meaningfully higher in the next few months. Still, I expect to see some periods of higher than normal rate volatility, in which the fund should hold up well relative to its peers.
Another fund I am keeping my eye on would be the TD U.S. Blue Chip Equity Fund. It has struggled on a year-to-date basis, as some of the higher flying sectors have faced headwinds. I am also somewhat concerned about the valuation levels of some of the names in the portfolio, but am comforted to some degree when the forward looking earnings expectations on considered. I do expect it to remain volatile, but for now, it still plays a role in the portfolios as a return enhancer because of its growth focus, which serves as a nice counterbalance to the more value focused Mackenzie Ivy Foreign Equity and Fidelity Canadian Large Cap Fund.
I continue to monitor the funds and the portfolios closely.