John Hood.
John Hood is president and portfolio manager at J.C. Hood Investment Counsel. His focus is options and ETFs.
Top Picks:
iShares MSCI Canada Minimum Volatility Index ETF (XMV.TO)
In this market low volatility ETFs seem like a good idea. The problem though is that many of defensive sectors (utilities, REITs etc.) have been heavily bought resulting in high P/Es and Price to Book value so I have avoided them. XMV is normal P/E about 17, P/B approximately 2x.
Horizons Active Floating Rate Bond ETF (HFR.TO)
This is a good time to park some cash so, Horizons Floating rate ETF is a good choice. Nothing exciting, trailing yield approximately 2 per cent minus 40bps, YTM about 1.7. Price fluctuates very little.
Horizons S&P 500 Index ETF (HXS.TO)
Most of my clients are older and are looking for income. One of my recent clients however does not want income in his non-registered accounts. He's in his mid-40s, has a high income and simply doesn't need investment income. This is a 'swap'-based ETF – i.e. an arrangement by Horizon for their 'counterparty' to deliver the 'total return of the ETF', including gains and distributions in exchange for a 'swap' fee. This structure eliminates withholding tax, the tax on distributions and in not vulnerable to U.S. estate taxes. HXS and HXT on TSX are both core products at Horizon and have been popular for years.
Past Picks: July 28, 2014
Vanguard Total Stock Market ETF (VTI.N)
Then: $102.11; Now: $107.43; +5.21%; Total return: +7.21%
iShares TSX Equity Income Index ETF (XEI.TO)
Then: $23.69; Now: $19.29; -18.57%; Total return: -14.82%
Vanguard FTSE Europe ETF (VGK.N)
Then: $58.82; Now: $55.40; -5.81%; Total return: -2.81%
Total Return Average: -3.47%
Market outlook:
The U.S. markets continue to look bullish to me, despite sluggish economic growth. Job numbers today were good. In previous months I have been adding a little Europe to portfolios and U.S. health care. Of course you can't just keep adding equities and maintain 60/40 equity/fixed income so I have been selling some Canadian assets to buy U.S. and European. This is a pretty good description of what I think about Canadian markets; if I'm buying I'm looking at low volatility ETFs. The oil sector continues to look dreadful. Which has account for a trade deficit in the last 5 quarters, excepting June results which were significantly improved