John DeGoey is vice-president and portfolio manager at BBSL. His focus is personal finance and ETFs.
Top Picks:
BMO MSCI All Country World High Quality Index ETF (ZGQ.TO)
This ETF provides access to stocks from around the world, making it extremely diversified. Products like this are excellent for reducing the home bias that plagues most investors.
BMO S&P 500 Hedged to CAD ETF (ZUE.TO)
This ETF provides access to the still-growing U.S. large cap market. Of critical importance is that it is currency-hedged, so that many of the easy currency gains of the past are not given up as the Canadian dollar normalizes to a more traditional level.
iShares MSCI Emerging Markets Index ETF (XEM.TO)
This ETF provides access to emerging markets (the most under-owned equity asset class in the world) with a particular tilt toward smaller companies, which usually generate better risk-adjusted returns.
Past Picks: November 5, 2014
Vanguard FTSE All-World ex Canada Index ETF (VXC.TO)
Then: $26.16 Now: $29.04 +11.01% Total return: +13.10%
Vanguard S&P 500 Index ETF (VFV.TO)
Then: $40.94 Now: $46.79 +14.29% Total return: +16.26%
Vanguard FTSE Emerging Markets Index ETF (VEE.TO)
Then: $28.90 Now: $28.08 -2.84% Total return: -0.48%
Total Return Average: +9.63%
Market outlook:
Now that the election is over, Canadians will once again need to come to terms with the fact that strong economic growth – as we have known it for generations – is not likely to return. That means lowering expectations for market returns (both here and abroad) and paying more attention than ever to costs. It also means that so-called "technical recessions" are likely to become commonplace. Furthermore, it means coming to terms with changes in tax policy and government programs. Finally, there's the fact that the Canadian dollar, which hit an 11-year low recently, is likely to move further upward relative to the U.S. dollar. This increases the need for using currency-hedged products when investing in the U.S.