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Fidelity Canadian Disciplined Equity Fund
This Canadian equity fund is somewhat unique in that it is run using a sector neutral approach, meaning it strives to have the same sector exposure as its benchmark, the S&P/TSX Composite Index. With the sector mix taken care of, it is the manager’s ability to find good stocks that will be the key driver of return.
read moreLeith Wheeler Canadian Dividend Fund
Leith Wheeler is one of those companies you don’t hear a lot about. Since 1982, this employee owned shop has quietly gone about its business of managing money for a wide range of Canadian retail, private client, and institutional investors.
This dividend focused offering is managed by the same team using the same process used for the highly regarded Leith Wheeler Canadian Equity Fund (LWF 002). They use a value focused, bottom up, value drive approach that looks for high quality, conservatively financed companies that generate attractive returns on capital, and are trading below what they believe it to be worth.
read morePowerShares Canadian Dividend ETF
In Canada, it has been shown that over time, roughly 65% to 70% of the total return of equities comes from reinvested dividends. That makes for a very compelling case to have dividend stocks a key part of your portfolio. With that in mind, I reviewed a number high quality, dividend focused ETFs, and this is one that stood out as pretty attractive relative to its peers.
read morePowerShares S&P/TSX Composite Low Vol ETF
The problem I see with many of the low volatility mandates is that investors have bid up the valuation levels of many of the stocks held in these products to very high levels. For example, according to Morningstar, the P/E ratio of the BMO Low Volatility Canadian Equity ETF (TSX: ZLB) is 21.4 times forward earnings. In comparison, the S&P/TSX 60 Index trades at approximately 15 times forward earnings. While ZLB has significantly outperformed the other Canadian low vol ETFs, I don’t see how that is sustainable at these levels of valuation. In comparison, this PowerShares ETF trades at a valuation level that is more in line with the broader market. Further, if you consider the forward looking growth rates, TLV looks to have a more positive outlook than ZLB, making the valuation levels that much more compelling.
read moreBMO Global Infrastructure Index ETF (TSX: ZGI)
Infrastructure names continued to struggle, with ZGI posting a very modest 0.3% drop in the three months ending April 30. This despite the strong rebound in the energy sector, which makes up nearly 40% of this fund. As we look forward, the outlook for infrastructure continues to improve. Economic growth globally appears to be more balanced, and many nations are now posting positive, albeit modest levels of growth.
read moreiShares MSCI EAFE Minimum Volatility Index ETF (TSX: XMI)
In most markets, low volatility ETFs have performed as advertised, outperforming the traditional cap based indices when markets fall. This ETF has broken that trend, falling 5.3% in Canadian dollar terms while the MSCI EAFE Index was down 3.9% during the same period. Much of the underperformance can be attributed to its healthcare and technology names, many of which struggled in the past few months. Another concern is that like other low volatility offerings, its valuation numbers are very stretched relative to the broader market and other...
read moreiShares U.S. Fundamental Index ETF (TSX: CLU)
Like the PowerShares FTSE RAFI Canadian Fundamental Index ETF (TSX: PXC) highlighted above, this ETF is constructed using the same fundamentally driven, rules based process, ranking stocks on a number of fundamental criteria. Apart from investing in U.S. traded stocks, this ETF holds roughly 1,000 names, ten times that of its Canadian counterpart. The concentration issue that is prevalent in the Canadian fundamental ETFs is not seen in the U.S. versions. While there is still an overweight in energy and financials, the combined weight is roughly half that of PXC.
read morePowerShares FTSE RAFI Canadian Fundamental Index ETF (TSX: PXC)
This rules based ETF is built using a process that rates and ranks the Canadian universe of stocks on key fundamental factors including sales, cash flow, book value, and dividends. The stocks are each ranked by the four fundamental measures, which results in a total score for each company. They are then ranked by their scores from best to worst, and the top 100 or so make up the ETF. Stock weights are determined by the fundamental score, with the better ranked stocks making up a higher weight in the ETF. There are no constraints on sector weights, which is where I begin to get a little worried about this particular ETF.
read moreiShares Canadian Short Term Bond Index ETF (TSX: XSB)
Short term bonds underperformed in the period, as stability in the commodity sector put upward pressure on Canadian short term rates. For the three months ending April 30, the yield on the Canada two-year bond rose from 0.42% to 0.68%, while the Canada five year finished the period at 0.87%, up from 0.67%. Despite this bump, XSB managed to end the period modestly higher.
read moreMackenzie Ivy Foreign Equity
With market volatility high in the first quarter, this concentrated, quality focused global equity fund did what it does best – protect capital better than its benchmark and peer group.
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