The Periodic Table For Canadian Investors

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While researching on periodic table of investment returns, I came across the following chart which can be very useful for Canadian investors. This chart shows the comparison of returns for various asset classes. Canadians can use this to plan their portfolio allocation strategies.

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Periodic-table-of-annual-returns-for-Canadians-2015

Legend:

Text Represents
RRB Real return bonds
S&P500 S&P 500® – S&P Dow Jones Indices
L. Bond Canada Long Term Bond Index – FTSE TMX Canada Indices
S. Bond Canada Short Term Bond Index – FTSE TMX Canada Indices
TSX S&P/TSX Composite (CAD) – S&P Dow Jones Indices
Wilshire Wilshire 5000 Total Market Index – Wilshire Associates
All Bond Canada Universe Bond Index – FTSE TMX Canada Indices
US Bond Barclays US Aggregate Bond Index
Gold Gold bullion
Emerging MSCI Emerging Markets Indexes – Emerging Markets – MSCI
EAFE MSCI EAFE Index – Developed Markets – MSCI
T-Bill 3 month Treasury Bills (T-Bill)

Source: Finiki

Here is one way to interpret this chart. In 2014, the S&P 500 shot up by 24% in Canadian dollar terms. But the TSX Composite index was up only 10.6%.Similarly the TSX lagged the S&P 500 in 2011, 2012 and 2013 as well.

Related ETF:

  • iShares MSCI Canada (EWC)

Disclosure: No Positions

MSCI Single Country Index Returns Review: Emerging Markets 2005 To 2014

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Yesterday we reviewed the Periodic Table of Investment Returns for Developed Markets. The chart below shows the MSCI country returns for Emerging Markets:

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MSCI Single Country Returns Emerging Markets 2005 to 2014

Source: Blackrock

Brazil has been an average to poor performer since 2010. It is surprising that Indonesia and Philippines are among the top in terms of 10-year annualized returns. Mexico’s 10-year annualized return is also decent at over 10%. Mexico’s economic growth is closely tied to that of the U.S.

WSJ: Foreign Stock Look Cheaper Than U.S. Stocks

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The S&P 500 is up by 2.40% year-to-date on price return basis. Many developed European markets are ahead of the U.S. as listed below:

UK’s FTSE 100: 6.4%
France’s CAC 40: 18.1%
Germany’s DAX Index: 16.8%
Spain’s IBEX35 Index: 10.8%

Among the emerging markets, China’s Shanghai Composite is up by an astonishing 37.3% so far.Brazil’s Bovespa has increased by over 12% while India’s Sensex have is down by about 2%.

Despite the out-performance, foreign stocks are cheaper than U.S. stocks according to an article in The Wall Street Journal. From the article:

It can be wise to diversify your stock portfolio internationally. Foreign stocks generally look cheap by comparison to U.S. stocks now. Interest rates also may stay low longer outside the U.S., which could give markets overseas a boost. Many experts say typical U.S. investors should consider putting at least 20% to 30% of their stock portfolio in foreign shares.

“There are good arguments why you would want to invest outside the U.S.,” says Joachim Klement, chief investment officer at Wellershoff & Partners, an investment consultancy based in Zurich.

SP500 vs MSCi ACWI excl US

But there will almost certainly be bumps along the way. When the Federal Reserve raises interest rates in the U.S., for example, stocks in Europe and Asia could take a deeper initial hit, in part due to the importance of the American economy, Mr. Klement says.

The sharp drop in some European markets on Wednesday showed how that could play out. The U.S. government said that morning that the economy had slowed in the first quarter, and the S&P 500 fell 0.4% that day. The benchmark index in Germany, home to many major exporters, dropped 3.2%.

Source:  A Road Map for Investing Overseas by Liam Pleve, WSJ

The article also discusses that based on CAPE ratio, foreign markets such as France, Italy, Japan, Malaysia, Peru, Poland, Singapore and Spain are cheaper than the U.S. market. However the CAPE ratio is not a good measure for foreign stocks since historical data is limited and composition of indices change often.

Edinburgh

Edinburgh, Scotland

 

MSCI Single Country Index Review: Developed Markets 2005 To 2014

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The following chart shows the returns for the various MSCI single country indices:

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Single Country Index Returns Devloped Markets 2005 to 2014

Source: Blackrock

  • It is surprising that Singapore yielded the highest annualized return in 10 years during the period shown.
  • Ireland has been the worst performers in five years during the same period.
  • While the MSCI German index fell by nearly 46% in 2008, since then it has yielded a positive return return every year except in 2014 and 2011.
  • No country has consistently been the best performing. This shows the importance of diversification.

Related ETFs:

  • iShares MSCI Germany Index Fund (EWG)
  • iShares MSCI Canada Index Fund (EWC)
  • iShares MSCI Australia Index Fund (EWA)
  • iShares MSCI United Kingdom Index (EWU)
  • iShares MSCI Singapore Index (EWS)

Disclosure: No Positions