We are almost 3 months into 2016 and while the Global equity markets have shown improvement in March the year to date results are still negative (mostly) overall.
The chart below shows the year to date and last 12 month returns for CORE indices.
As you can see by this chart the only the United States SP500 has generated a positive return over the last 12 months and that is primarily due to weakness in the CDN$.
Even the ‘SAFE’ government bond market has failed to generate a POSITIVE total return over the last 12 months as reflected by the TD Bond Fund (shown above). This is not a surprise with 90% of the worlds bonds paying LESS THAN 1%.
However, we all know that if we only focus on the short term underperformance we will not achieve our longer term average target return. Uncertain short term returns (VOLATILITY) is the price that is paid for average returns higher than a 5 year GIC (currently in the 2% range).
(I encourage everyone to click on the link and review this fund)
Those needing regular income need to keep 2-4 years cash flow in things ‘that don’t go bump in the night’.
Growth portfolios need to MINIMIZE long term exposure to investment grade bonds since the average yield is UNDER 2%
Remember that volatility is normal…not comfortable BUT normal
The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision.