APR 30 2013 – Much Ado About Nothing

As we sat down to assess our clients’ portfolios at the end of the first quarter, an apparent different story was emerging from what we were reporting. Depending upon one’s bond and cash allocation, portfolios were returning between 3% and 6.9% just for the Quarter End March 31, 2013. However, by mid-April when these numbers become available, the TSX Composite Index, which is our Canadian Stock Exchange benchmark, was awash in red ink. So, what happened?

In a word, materials.

In the month of April the Materials Sector of the TSX Composite (essentially gold, mining and resource companies other than energy) was down 14.6%. This dragged down the TSX Composite Index, to minus 2.1%. Many were concerned their portfolios may have suffered the same fate but this wasn’t the case for the following three reasons:

1) TSX Sector Allocation

The large-cap dividend style means client holdings are concentrated in the following Sectors which on the whole out-performed the Composite benchmark in the month of April.

Consumer Staples +6.7%
Telecom +1.4%
Utilities +5%
Financial Services -1.3%
Energy -4.4%

2) Geographical Diversification. US and Global Stocks had a very good month.

US (S&P 500 C$) +0.8%
Global (MSCI C$) +2.1%

3) Asset Allocation. Bond returns remained positive.

Cdn Universal Bond Index +1.1%

So despite the average Canadian Stock price having a very challenging month, your portfolio is likely flat or actually up 1%. Once again proving that much of what we hear in the media is “Much Ado About Nothing”.

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