8.3%
GLOBAL PORTFOLIO TAKES A HIT
By Gordon Pape
Stock markets around the world are down this year. So, it should come as no surprise that the IWB Global Portfolio is down as well. None of our holdings gained ground during the six months since our last review in March.
This portfolio was launched in March 2012. It is designed to provide an international model for growth-oriented investors, with a target annual rate of return of 8-10%.
The portfolio invests in eight domestic, American, and international ETFs, covering all parts of the globe. Investors should only track this portfolio if they are willing to accept stock market risk. As we’ve seen, that risk has been significant this year.
Here’s a look at how our ETFs have performed since the last update in March. Results are as of the afternoon of Sept. 15.
iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC). This ETF tracks the performance of the S&P/TSX Composite Index. The TSX has performed better than the major US indexes, but it is down for the year, nonetheless. The units lost $3.82 (10.9%) since the last review. We received two quarterly distributions for a total of $0.456 per unit.
iShares S&P/TSX Small Cap Index ETF (TSX: XCS). This ETF tracks Canadian small cap stocks. This sector of the market showed strength when commodity prices rallied at the start of the year, but people bailed out quickly and the units lost $4.30 in the latest period. We received two quarterly distributions that totaled $0.25 per unit.
iShares US Small Cap Index ETF (CAD-Hedged) (TSX: XSU). US small cap stocks pulled back in the latest period, along with the broader market. The units were down $5.28 or 12.7%. We received a semi-annual distribution in June of $0.148 per unit.
iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX: XSP). This ETF tracks the performance of the S&P 500. It’s been a bad year for US stocks, and the results here show it. This ETF lost $6.79 (14%) during the period. We received a mid-year distribution of $0.233 per unit.
BMO Nasdaq 100 Equity Hedged to CAD Index ETF (TSX: ZQQ). This fund provides exposure to the top 100 stocks on the Nasdaq exchange. This has been the most volatile index in the US in recent months as the tech sector has seen its largest retreat since 2008-09. The fund is down $20.97 (19.6%) since the last review. To add insult to injury, there was no mid-year distribution.
.iShares MSCI EAFE Index ETF (CAD-Hedged) (TSX: XIN). This ETF tracks markets in Europe, Australasia, and the Far East. Surprisingly, the stock markets in those countries have fared better than those in North America. The units lost only $2.10 (7%) since the last review. We received a semi-annual distribution of $0.518 per unit in June.
iShares MSCI Frontier 100 ETF (NYSE: FM). This ETF holds major companies in Third World countries from Nigeria to Vietnam. These markets have suffered badly this year and the units are down US$6.19 (18.9%) since the last review. We received a mid-year distribution of US$0.607 per unit in June.
iShares MSCI Emerging Markets ETF (NYSE: EEM). This sector continues to lose ground as the pandemic, interest rate hikes, and the war in Ukraine continue to weigh heavily on global markets. The units are down US$7.27 (16%) since our last review. We received a mid-year distribution of US$0.362 per unit.
We received $6.90 in interest from the cash balance in our EQ Bank high-interest savings account.
Here’s a look at how the portfolio stood on the afternoon of Sept. 15. The Canadian and US dollars are treated at par, and commissions are not considered. The percentage in the Gain/Loss column represents the cumulative return since the portfolio was launched or since the security was added. The initial book value was $20,002.30.
IWB Global Portfolio (a/o Sept. 15/22)
| Security | Weight | Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Retained
Income |
Gain/
Loss % |
| XIC | 20.2 | 290 | $22.34 | $6,479.95 | $31.27 | $9,068.30 | $212.88 | +43.2 |
| XCS | 6.4 | 165 | $16.23 | $2,677.90 | $17.38 | $2,867.70 | $64.66 | + 9.5 |
| XSU | 14.9 | 185 | $17.96 | $3,527.35 | $36.22 | $6,700.70 | $69.12 | +91.9 |
| XSP | 20.9 | 225 | $17.06 | $3,997.30 | $41.76 | $9,396.00 | $237.03 | +141.0 |
| ZQQ | 21.0 | 110 | $21.44 | $2,358.40 | $85.77 | $9,434.70 | $241.56 | +310.3 |
| XIN | 9.9 | 160 | $21.38 | $3,421.25 | $27.75 | $4,440.00 | $326.49 | +38.9 |
| FM | 2.4 | 40 | $35.18 | $1,407.25 | $26.60 | $1,064.00 | $32.68 | -22.1 |
| EEM | 4.2 | 50 | $43.81 | $2,190.50 | $38.14 | $1,907.00 | $232.08 | -2.3 |
| Cash | 0.1 | $66.48 | $73.38 | |||||
| Total | 100.0 | $26,126.38 | $44,951.78 | $1,416.50 | +77.5 | |||
| Inception | $20,002.30 | +131.8 |
Comments: For the first time, every security in the portfolio lost ground. The worst performer was ZQQ, which took a beating as high-tech stocks continued to nosedive. The best (or least bad) result came from XIN, as overseas markets fared better than those here in North America.
The net result was a loss of 19% over the latest period – a big setback any way you look at it.
As a result, our cumulative gain since inception has been cut to 131.8%. That works out to a compound average annual growth rate of 8.34%. Despite the big loss, that’s still within the original target range. However, I don’t think we still have seen the bottom of this bear market yet so we may have to endure more losses before things turn around.
Changes: Despite the drop in value in the latest period, this portfolio continues to offer excellent diversification and geographic coverage. We will not replace any components at this time.
We have a little money to reinvest so we’ll add to a few positions while prices are down.
XSP – We’ll buy five more units at a cost of $208.80. That will increase our total to 230 while reducing retained income to $28.23.
XIN – We’ll invest $277.50 in 10 more units, bringing our total to 170. We’re left with $48.99 in retained earnings.
EEM – We will buy another five units for $190.70, bringing our total to 55. Retained income will drop to $41.38.
All else remains the same.
We now have cash and retained income of $812.88. We’ll move the money to the Saven Financial high interest savings account, which is currently paying an impressive 3.3%.
Here is the revised portfolio. I will review it again in March.
IWB Global Portfolio (revised Sept. 15/22)
| Security | Weight | Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Retained
Income |
| XIC | 19.9 | 290 | $22.34 | $6,479.95 | $31.27 | $9,068.30 | $212.88 |
| XCS | 6.3 | 165 | $16.23 | $2,677.90 | $17.38 | $2,867.70 | $64.66 |
| XSU | 14.7 | 185 | $17.96 | $3,527.35 | $36.22 | $6,700.70 | $69.12 |
| XSP | 21.0 | 230 | $18.29 | $4,206.10 | $41.76 | $9,604.80 | $28.23 |
| ZQQ | 20.7 | 110 | $21.44 | $2,358.40 | $85.77 | $9,434.70 | $241.56 |
| XIN | 10.3 | 170 | $21.76 | $3,698.75 | $27.75 | $4,717.50 | $48.99 |
| FM | 2.3 | 40 | $35.18 | $1,407.25 | $26.60 | $1,064.00 | $32.68 |
| EEM | 4.6 | 55 | $43.29 | $2,381.20 | $38.14 | $2,097.70 | $41.38 |
| Cash | 0.2 | $73.38 | $73.38 | ||||
| Total | 100.0 | $26,810.28 | $45,628.78 | $739.50 | |||
| Inception | $20,002.30 |
Previous updates
iwb22234 | iwb22213 | iwb22138 | iwb22112 | iwb22021 | iwb21936 | iwb21813 | iwb21735 | iwb21713 | iwb21635 | iwb21612 | iwb21535 | iwb21513 | iwb21414 | iwb21335 | iwb21311