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Like a stopped clock, I was finally right in 2013.

For a few years, I have been warning investors that interest rates would rise and create all kinds of issues in their portfolio. This summer, rates rose and problems ensued for investors with heavy exposure to bond funds, real estate investment trusts, utility stocks and preferred shares.

We'll look at all the year's hits and misses in this annual accountability edition of the Portfolio Strategy column, starting with those related to interest rates. To set the scene, we were cruising along in low-rate la-la land until May, when bond yields began a summer-long surge.

In a series of columns, I presented a pair of apparently conflicting ideas. One, bonds and bond funds will fall in price at times of rising rates and, two, that almost all investors need bonds in their portfolio for times when the stock markets sink.

Bonds did come back a bit after their summer decline, but not enough to prevent many of the country's largest bond funds from posting losses of 1 to 2.5 per cent for the year through late December. I have heard from quite a few investors who see this decline as reason to get out of bonds altogether. Don't do it. If the stock markets fall, and they could well do that at current levels, bonds will again fulfill their function in diversifying your portfolio.

Still, investors can position their bond holdings for a rising rate world. I suggested in a column last summer that investors stick to short-term bonds maturing in less than five years, and emphasize corporate bonds.

This worked out pretty well. While the DEX Universe Bond Index Fund (XBB-TSX), a proxy for the entire Canadian bond market, was off 0.8 per cent for the year to Dec. 20, the DEX 1-5 Year Laddered Government Bond Index Fund (CLF) was up 1.8 per cent and the DEX Investment Grade 1-5 Year Laddered Corporate Bond Index Fund (CBO) was up 2.1 per cent.

A more radical approach was outlined in a September column that more than a few readers questioned. Adviser John DeGoey explained how he was using market-linked guaranteed investment certificates as a bond substitute from some clients. These GICs offer returns based on stock market performance, which Mr. DeGoey expects to be better than returns from bonds or traditional GICs. However, many people regard market-linked GICs as a money maker for banks only. Let's check back on this column a year from now.

Rising rates hurt bonds, and some dividend stocks, preferred shares and real estate investment trusts, or REITs. The REIT decline was a bit of a shocker for the many investors who made good money in these stocks in the past four years through a combination of regular monthly income and share price gains.

"This summer is the time to buy in [to REITs] and increase the yield of your portfolio," Derek Warren, a portfolio manager at Morguard Financial Corp., said in an interview for an August column. "Just be prepared for increasing volatility, and don't expect REITs to go straight up to new highs." Mr. Warren was on the money there – REITs have wandered up and down since the summer without making a decisive move in any direction.

Another big theme of 2013 in this column was the outperformance of U.S. and global markets in comparison to Canada. At the very end of 2012, I said: "Unless the global economy picks up in 2013 and spurs demand for commodities, Canada could underperform again."

And so it did. Add up the cumulative underperformance over the three years to Nov. 30 and you get an annualized return for the S&P/TSX Total Return Index of 4.1 per cent that compares to 19.1 per cent for the S&P 500 and 12.2 per cent for the MSCI Europe Australasia Far East (EAFE) Index. Both foreign index returns are in Canadian dollars.

The Vancouver hedge fund firm Sherpa Asset Management was all over this performance disparity in making a case in an April column for rotating some money out of Canada and into U.S. and international markets. Sherpa outlined four factors that helped the Canadian market in previous years, but were then holding it back: rising oil prices, strong returns from bank stocks, soaring gold prices and a rising dollar. In 2013, oil prices were spiky but never rose much, gold was a disaster and the dollar sank. Only bank stocks delivered.

Heading into 2013, investors should take a more cautious approach to moving money out of Canada and into other markets. If global economic growth picks up, Canada's commodity-heavy stock market might offer better prospects than a U.S. market that has risen for five straight years.

I could have hit the global investing theme harder than I did. A list of common investing mistakes was presented in a February column, such as holding onto losing stocks too long; having too much exposure to stocks; making flaky stock picks; and haphazard mixing of stocks, ETFs and mutual funds. I missed the worst mistake of all in a year like 2013 – not having a significant amount of exposure to U.S. and international markets.

My biggest miss of the year was a May column headlined "How to shelter your portfolio from a housing decline." The thesis was that a decline in the housing market would put pressure on the share prices of the big banks and some smaller lenders. With one exception, Laurentian Bank of Canada, all the stocks mentioned in the article were on track late in 2013 for a year of rich double-digit gains.

Housing is hanging in well for now, but I'm skeptical it can keep rising. So don't get greedy with bank stocks. This post from the Juggling Dynamite blog (read it here) suggests I'm not the only one who thinks the housing risk to banks has been delayed, not discredited.

A couple of other Portfolio Strategy columns from 2013 were on to something. The first column of the year highlighted the exchange-traded funds that the U.S. company Vanguard has been listing on the Toronto Stock Exchange. In many cases, these ETFs are low-cost leaders in their categories, or close to it. Investors and advisers have picked up on this cost advantage and driven Vanguard's Canadian assets to $1.6-billion as of Nov. 30, up 244 per cent for the 11-month period. "On a percentage basis, their growth is phenomenal," said analyst Pat Chiefalo of National Bank Financial.

Later in January, I wrote a column that questioned whether dividend stocks could keep outperforming and suggested investors include some non-dividend paying growth stocks in a portfolio. As it turned out, many dividend stocks, particularly those in the utilities sector, sagged in mid-year when bond yields rose.

The column on growth investing quoted Stephen Hui, portfolio manager and partner at growth specialist Pembroke Management Ltd. in Montreal. The firm's marquee growth funds, GBC Canadian Growth and GBC American Growth, were up 36.3 per cent and 40.5 per cent.

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