Halftime market report 2012
In the first half of the year, the falling Canadian Dollar has really helped global investing. For the longest time, the rising dollar has made Canada the place to invest but now global investments are looking brighter.
Currency helped global investors
The MSCI World index, when measured in local currencies, showed a return of 5.02% for the first 6 months of 2012. Canadian investors, however, would have experienced a higher return (6.4%) because the Canadian dollar has dropped in value relative to other currencies.
Here’s the data for Canadian investors:
|
YTD |
|
| S&P 500 |
9.70% |
| MSCI World Index |
6.40% |
| MSCI Pacific Index |
4.40% |
| MSCI Europe Index |
3.10% |
| TSX Composite |
-1.50% |
Up . . . then down
If you look at the month-to-month returns, you can see that the year started strong with decent returns from all markets in January and February but then the trends started to change and all of the markets lost money in April and May (with pretty big losses in May). June finished the half with a decent rebound.
| Fund Name |
Jan-12 |
Feb-12 |
Mar-12 |
Apr-12 |
May-12 |
Jun-12 |
| MSCI Europe GR CAD |
3.1 |
4.5 |
0.9 |
-3.2 |
-7.8 |
6.3 |
| MSCI Pacific GR CAD |
4.9 |
2.9 |
1.2 |
-2.5 |
-5.7 |
3.9 |
| MSCI World GR CAD |
3.5 |
3.1 |
2.8 |
-2.2 |
-4.1 |
3.5 |
| S&P 500 CAD |
3.3 |
2.4 |
4.6 |
-1.7 |
-1.6 |
2.5 |
| S&P/TSX Composite TR |
4.4 |
1.7 |
-1.6 |
-0.6 |
-6.1 |
1.1 |
Fixed-income returns
The average return for fixed income funds reported by PalTrak was 1.6% for the first 6 months of the year. Global Bonds really stole the spotlight in the first 6 months of 2012 with an average return of 2.8% but there were some corporate bond funds and ETFs that made 5% to 10% in the first half of the year. Corporate Bonds also did better than government bonds.
Sectors gone wild
When you look at the different sectors of the TSX, there was a huge polarization in returns. The top three sectors were Health Care (21.2%), Real Estate (13.8%) and Consumer Discretionary (13.2%).
At the other end of the spectrum Diversified mining (-19.1%), Energy (-11.1%) and Materials (-10.7%) made up the bottom three.
| Fund Name |
YTD Return |
1 Yr Return |
3 Yr Return |
5 Yr Return |
10 Yr Return |
| S&P/TSX Capped Health Care TR |
21.2 |
17.2 |
38.3 |
10.2 |
2.9 |
| S&P/TSX Capped Real Estate TR |
13.8 |
12.9 |
27.8 |
3.9 |
12 |
| S&P/TSX Capped Cons Disc TR |
13.2 |
-3.4 |
10.5 |
-3.1 |
3.2 |
| S&P/TSX Capped REITs TR |
11.6 |
18.5 |
30 |
7.9 |
12.7 |
| S&P/TSX Capped Cons Staples TR |
8.8 |
11 |
11.2 |
3.7 |
4.2 |
| S&P/TSX Capped Industrials TR |
4.2 |
-4.8 |
14 |
1.1 |
4.2 |
| S&P/TSX Capped Financials TR |
4.2 |
-5.5 |
7.5 |
-0.4 |
8.4 |
| S&P/TSX Capped TeleServices TR |
1.5 |
9.2 |
19.4 |
3.7 |
14.8 |
| S&P/TSX Capped Utilities TR |
0.6 |
5.1 |
14.2 |
5.9 |
9.6 |
| S&P/TSX Capped Info Technology TR |
-6.5 |
-27.2 |
-3.1 |
-8.5 |
2.8 |
| S&P/TSX Capped Materials TR |
-10.7 |
-22 |
4.7 |
2 |
9.5 |
| S&P/TSX Capped Energy TR |
-11.1 |
-23.4 |
-1.2 |
-5.2 |
8.8 |
| S&P/TSX Capped Diversified Mining TR |
-19.1 |
-38.5 |
13.1 |
2.1 |
21.1 |
What does this tell us about the next 6 months?
Absolutely nothing. Remember that markets are random, especially over the short term. Psychology will often trick you into linear extrapolation (thinking in straight lines) causing you to believe that the winners for the past 6 months will be winners for the next 6 months. That same psychology will lead you to run from the losers in fear they will keep losing money.
For me, I enjoy reviewing my investments every 6 months. Every now and then if I have some extra cash, I throw it into the losers to practice buy low and with big losses in the energy and mining sector, that might be worth looking at. What do you think of that idea?
All data from this article came from Morningstar’s Paltrak to the end of June 2012
Comments
Thanks for sharing the market report with all the details and with the infatuations. The financial halftime report for 2004 was really helpful indeed.Keep sharing the review of the investment.