10.7%
By Gordon Pape
The markets continued to rebound from the crash of a year ago, and the result was another big gain for our Global Portfolio.
This portfolio was launched nine years ago, in March 2012. It was specifically designed to provide global exposure for growth-oriented Tax-Free Savings Accounts. This is done through 100% exposure to domestic and international ETFs. That means you should only track this portfolio if you are willing to accept stock market risk, although the use of ETFs provides a high degree of diversification. Our target is an average annual return in the 8-10% range.
Here’s a look at how our ETFs have performed since the last update in late October. Results are as of the afternoon of March 19.
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 been performing well, in large part due to recoveries in the energy and financial sectors, and the units are up $4.26 since the last review. We received one quarterly distribution of $0.192.
iShares S&P/TSX Small Cap Index ETF (TSX: XCS). This ETF tracks Canadian small cap stocks. After a long stretch of negative results, we are now seeing gains, with the units jumping $4.81 in the latest period. A significant percentage of Canadian small caps are mining companies, which have benefitted from the rise in commodity prices. We received one small quarterly distribution of $0.064 per unit.
iShares U.S. Small Cap Index ETF (CAD-Hedged) (TSX: XSU). This U.S. small-cap ETF has continued to rebound from last year’s slump, with the units jumping $12.63 since the last review as American small-caps surged. We received a semi-annual distribution in December of $0.183.
iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX: XSP). This ETF tracks the performance of the S&P 500. The index has been on a strong run and the units are up $4.85 since the October review. We received a year-end distribution of $0.268 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. Despite the recent pull-back in the tech sector, it is up $8.15 since the last review. The fund makes annual distributions in December, when we received $0.38 per unit.
.iShares MSCI EAFE Index ETF (CAD-Hedged) (TSX: XIN). This ETF tracks markets in Europe, Asia, and the Far East. Although they’re lagging behind the U.S., these markets are gradually recovering from the economic effects of the pandemic. The units have gained $4.30 since the last review and we received a semi-annual distribution of $0.226 per unit in December.
iShares MSCI Frontier 100 ETF (NYSE: FM). This ETF holds major companies in Third World countries from Nigeria to Vietnam. These markets were badly hit by the initial effects of the pandemic but are recovering and the units are up US$2.72 since the last review. We received a semi-annual distribution of US$0.187 in December.
iShares MSCI Emerging Markets ETF (NYSE: EEM). Emerging Markets have also recovered from last March’s slump. This ETF is up US$7.95 since our last review. We received a year-end distribution of US$0.519 per unit.
We received $9.61 interest from the cash balance in our Motive Financial high-interest savings account.
Here’s a look at how the portfolio stood on the afternoon of March 19. The Canadian and U.S. 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 TFSA Portfolio (a/o March 19/21)
| Security | Weight
% |
Total
Shares |
Average
Price |
Book
Value |
Current
Price |
Market
Value |
Retained
Income |
Gain/
Loss % |
| XIC | 15.5 | 250 | $20.36 | $5,089.95 | $30.12 | $7,530.00 | $211.38 | +52.1 |
| XCS | 6.3 | 160 | $16.09 | $2,575.05 | $19.23 | $3,076.80 | $77.46 | +22.5 |
| XSU | 16.9 | 180 | $17.96 | $3,297.80 | $45.66 | $8,218.80 | $211.50 | +155.6 |
| XSP | 23.0 | 220 | $17.06 | $3,752.70 | $42.24 | $11,181.60 | $315.12 | +156.0 |
| ZQQ | 21.0 | 120 | $21.44 | $2,572.80 | $93.18 | $10,203.60 | $222.36 | +305.2 |
| XIN | 9.5 | 160 | $21.38 | $3,421.25 | $28.84 | $4,614.40 | $112.25 | +38.2 |
| FM | 2.1 | 35 | $35.09 | $1,228.30 | $29.71 | $1,039.85 | $145.77 | – 3.5 |
| EEM | 5.6 | 50 | $43.81 | $2,190.50 | $54.00 | $2,700.00 | $165.28 | +30.8 |
| Cash | 0.1 | $43.62 | $53.23 | |||||
| Total | 100.0 | $24,171.97 | $48,618.28 | $1,461.12 | +107.2 | |||
| Inception | $20,002.30 | +150.4 |
Comments: The last two periods have been the best this portfolio has ever had. Over the past 12 months, every ETF gained ground. The latest six months saw an overall gain of 20.5%.
Since inception, the portfolio has gained 150.4%, which works out to a compound annual growth rate of 10.74%. That slightly exceeds the top end of our target range.
Changes: This portfolio is performing well and provides excellent diversification and geographic coverage. We will not replace any components at this time.
We don’t have enough retained earnings in any security to make any meaningful additions, so we’ll keep our cash total of $1,514.35in our TFSA Savings Account at Motive Financial (a division of Canadian Western Bank), which now pays 1.25%.
I will review the portfolio again in September.
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