All Good? (TWTW – Nov 1-5, 2021)

All good? So the FED has – in one of the most widely anticipated and widely communicated moves … – announced it would begin the process of scaling back its highly market supportive bond purchases, starting later this month => Click HERE!

and markets? … far from having a hissy fit a la Taper Tantrum 2013, didn’t do much … other than continuing to scale a wall of “don’t worry be happy”?

Of course there is this whole reopening process still underway, and positive news there => latest Pfizer news HERE! suggests that we can all look forward toward further normalization in the weeks and months to come 🙂 BTW … when is the last time you saw clinical trials stopped because efficacy was so good they didn’t need to keep going … ($PFE stock up nicely Friday on the news …)

On a related note – not liking this business of gain of function … Is someone trying to wipe out 1/2 of Earth’s population? I guess that would help deal with Global warming … => click HERE!

More on gain of Function: => click HERE!

Highly disturbing … Building the death star?

Most importantly for the moment, evidently the Pfizer news having a rather beneficial impact on Travel related stocks/theme – see Airlines, Cruise Lines, Airbnb et all today 🙂 Interestingly all of this in the process taking Harvest Portfolios’ TRVL up to a 6 months or so high …

Anyways, more on all of this further below, but in the meantime, a look at YTD and for month of October in terms of top and bottom 10 performers at iShares Canada:

October 2021 – top and bottom 10 performing ETFs – iShares Canada:

Of note:

  • EM not participating in the nice rebound from September otherwise witnessed in October. India – taking a breather in relative performance last month
  • Energy dominates (COP26 or not) YET paradoxically is the only ETF around with negative trailing 5 year compounded returns despite a spectacular “reopening performance” (see trailing 12 months returns)
  • Silver (What did I miss here?) notable gains in October
  • Bonds: rising yields = falling prices = negative performance. While tempting in my books to look at the 2021 bond losses as opportunity to “diversify” (from equity risk) I will keep holding back, as it remains worth noting that said negative performance came after levels reached with all the stimulus in the world (meaning the most price insensitive buyers – FEDs – pushing prices to levels not seen before … unless in the lands of negative yields)
  • Tech – nice bounce, presumably helped along by continued strong financial results … (will weakness in the mega cap tech space return upon yields rising further … should they continue to?)

YTD – top and bottom 10 performing ETFs – iShares Canada:

Of note:

  • the bottom performing ETFs YTD (China; Silver; and Gold) were up last month … but remain under water YTD and on a trailing 12 months basis … Better prospects ahead?
  • Aside from Energy (which dominates, as noted above), Income / Dividend category (essentially driven / dominated by financials) also has done very well now for some time, including REITs, which … well, we are going back to normal soon? right?
  • Canada – Value: very strong performance last month: propelled by strength in key sectors: Financials and Energy. More to come? If you thought Canada’s exposure to Financials, Energy and Materials at some 56% of the index was high … well, with XCV it is at … 92%  … dominated by Financials at close to double the index exposure, followed by Energy at about 50% greater energy content than the traditional index. Materials – more or less in line. Oh Tech within Value? zero! In case you were wondering…
  • Active Preferred shares – is it just me? OR, has Dynamic’s Active Prefs ETFs $DXP just killed it? up 28.7% YTD, vs CPD at +18.95% … (incidentally, Horizons’ HPR also beat the CPD “benchmark” ETF handily YTD, while lagging behind DXP)

And now a look at Sectors and Factors (YTD):

  • Winning Energy; and Financiall sectors driving index higher and to outperformance versus US
  • Global Agriculture; Canadian Tech; Financials, Real Estate and Energy all producing YTD results ahead of those of the broader index (XIC). XIT, however, lagging index returns both 1 and 3 months
  • Golds despite positive October still negative YTD, and dragging down XMA in process (seeing XMA’s significantly Gold exposure)
  • Discretionary (Global) significantly outperforming Staples both in October and YTD. Will that Relative Strength unwind some if/when rates start to crimp “spenders'” style? (Staples – diversification candidate at slight discount to market on P/E basis?)
  • Canadian Real Estate meaningfully outperforming Global Real Estate – is that Relative trade now done and over?

 

and now over to “Factors”:

  • RAFI’s CRQ (Fundamental Indexing) topping the “Factors” chart year-to-date, DESPITE sector concentration that isn’t as extreme as XCV
  • Value (XCV) in Canada leaving Growth (XCG) in the dust on a 1 month 3 months, 6 months, YTD, and 12 months trailing basis
  • Dividends – if you ever doubted that Dividends matter a great deal … well they continue to … and rebounded very well, with dividend growth “returning” including for Banks following this week’s regulatory decision allowing banks to resume dividend increases / share buybacks
  • ESG “Aware” = keeping very close to traditional benchmark … validating notion that no performance “sacrifice” required. (with industry weightings also fairly close to said benchmark)
  • Minimum Volatility – Relative post possibly “surprising” 2020 performance: back to more “reasonable” / comfortable experience = possibly worth considering anew once deciding to seek to blunt volatility of mainstream benchmark?

Inflation?

Well, here there everywhere, transitory (of course) => but in case:

Consider this: => Auspice commodity ETF Click HERE!

which may be something worth considering, much like looking at Canadian Energy for instance

For NinePoint Partners’ Eric Nuttall’s recent presentation at Mindpath Virtual 2021 = Click HERE!

Well worth a listen in my opinion, as it encapsulates in a very well articulated manner where we are at with regards to Energy – and why Canada’s Energy sector should continue to do well from here on in … (absent political nonsense from Ottawa I should want to add)

Annnd … Forestrong is now “independent” => click HERE to Read!

All the best to Tyler Mordy and his team 🙂

ETF news:

Harvest Portfolios: launching a gaming and entertainment ETF => click HERE!

in what I guess i could term another re-opening play (see TRVL & comments above)

Horizons ETFs – Active EM ETF recently launched. Possibly looking like just what the Dr. ordered as far as getting some EM exposure … High Active share, concentrated, GARP oriented, and focused toward consumer side of the equation. For Canadians, good that diversified, but without energy and materials… => click HERE!

  • … something not many ETFs have upon launch: this is an ETF version of a highly rated fund with a long term track record, and meaning AUM …

Other Horizons news: lowering fees on EW Banks => click HERE!

Recently made available in ETF format => Purpose Credit Opportunities Fund => Click HERE!

Manager Sandy Liang recently spoke at Mindpath Virtual 2021, and given the current backdrop in fixed income, there is no doubt in my mind that now is the time when one needs to look at fixed income differently overall. If just looking at basic spread, or duration construct, well, I don’t think that one will necessarily be very happy or successful. Being both more tactical and more strategic is probably the way to go … while seeking to take advantage of specific opportunities…

Recent commentary from Sandy: Click HERE!

Hamilton ETFs – crossing $1 Billion mark in AUM – congrats Rob and Team, very well done! click HERE!

Other:

  • Judge rules in favour of Edward Rogers in his feud with family over control of Rogers board of director
  • Telus produced decent results and increased its dividend
  • Enbridge produced good results and didn’t (but its absolute yield level is still attractive in a world void of decent yield) => click HERE!
  • US Fitness company Peloton got absolutely smoked today … down about 1/3 or more (even after having earlier already gotten trimmed meaningfully on earlier issues – including safety on treadmills …)
  • Good article from SteadyHand CEO Tom Bradley => Click HERE!

The going could be getting harder indeed …

weekly “Thematic” performance:

Notables:

  • see Pfizer news above – TRVL “theme” coming on strong this week
  • Clean Green Energy strong – see TESLA’s week over week performance for some explanation.
  • Aside from Tesla, Nvidia also very strong (embedded within NEXT, but not to the degree TSLA embedded within QCLN … in case you are wondering …)
  • Blockchain strong as well …

sector performance:

  • interesting to see Consumer areas dominating (sign of early move into some more defensive exposures?)
  • Financials up, yes, BUT question is … more upside now that share price repurchases respectively dividend hikes on their way?
  • Energy – continued strength – with OPEC not doing much to help … (happily awaiting USD100 / barrel?)

 

Have a great week-end!