Annual Total Returns for Key Market Indices from 2012 to 2021: For Canadian Investors

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One of the key strategies for success with investing in equities is diversification. Following this strategy not only allows an investor reduce risk but also generate higher returns. Diversification can take many forms The easiest way to achieve diversification is to spread one’s investment across many times of asset classes.

The following chart shows the benefits of diversification from a Canadian perspective:

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Source: Morningstar Direct, Russell Investments. Annualized return in CAD. Canadian equity=S&P/TSX Composite Index, US Equity=S&P 500 Index, International Equity=MSCI EAFE Index, Emerging Markets=MSCI Emerging Markets Index, Canada Bonds=S&P Canada Aggregate Bond Index, Emerging Markets Debt= JP Morgan Emerging Market Bond Index, Global High Yield=Bloomberg Global High Yield Index, Global Infrastructure=S&P Global Infrastructure Index, Global Real Estate Investment Trusts (REITs)=FTSE EPRA NAREIT Developed REITS Index, Commodities= S&P Goldman Sachs Commodities Index, Indexes are unmanaged and cannot be invested in directly. Past performance is not indicative of future results. Index performance does not include fees and expenses an investor would normally incur when investing in a mutual fund. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. 

Note: Returns shown above are in C$

Source: Going Global: Finding Opportunities in a World of Uncertainty, Russell Investments

A few observations:

Since 2021, Canadian stocks were the top among the asset classes shown only once in 2016.

Canadian equities have underperformed their American peers by a wide margin of 10% in the past 10 years ending in 2021.

Commodities have yielded average to mostly negative annual total returns in most the past decade.

Related ETFs:

iShares MSCI Canada Index Fund (EWC)

SPDR S&P 500 ETF Trust (SPY)

Disclosure: No positions

Update to Automatic Conversion of Russian ADRs

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The saga with Russian DR programs continues to evolve. I posted a note on Automatic and Forced Cancellation as notified by the depository BNY Mellon on mid-last month. Today BNY Mellon has published the below important update on the automatic conversion of Russian ADRs. As the deadline nears for the cancellation of these ADRs, many investors who still haven’t take action have questions on what would would happen to their holdings. So its important to monitor these developments and take appropriate actions.

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Source: Russia Update to DR Automatic Conversion, Aug 1, 2022, BNY Mellon

Earlier:

Russian ADRs Update: Automatic and Forced Cancellation

Calendar Year S&P 500 Index Returns 1926-2021: Chart

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One of the strategies for building long-term wealth is to invest in stocks. While there are many markets to invest in for American investors, the US equity market has generated excellent returns in the past and continues to remain strong. In a recent post, I noted how US stocks as represented by the Dow have pounced other major developed markets from 2010 to 2021.

The more popular S&P Index has also performed very well over the years. Since 1926, the index has yielded positive returns 74% of the time as shown in the chart below.

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Source: Managing Market Volatility, Russell Investments

Related ETFs:

  1. SPDR S&P 500 ETF (SPY)
  2. iShares Core S&P 500 ETF (IVV)
  3. Vanguard S&P 500 ETF (VOO)
  4. SPDR Portfolio S&P 500  ETF (SPLG)

Disclosure: No positions