David Cockfield, managing director and portfolio manager at Northland Wealth Management
Focus: Canadian equities and ETFs

MARKET OUTLOOK

What a difference a year makes. A year ago, equity markets were in freefall with predictions of an impending recession widely accepted. This year, despite high multiples and declining profit growth, equity markets are buoyant. While there is some progress on the trade front, the war is far from over. Brexit seems assured, but the economic fallout is still unknown. High performances from equity markets back-to-back are rare and the final impact of the tariff war may well yet be felt. Equity market values are stretched and caution is warranted before committing additional funds.

TOP PICKS

ISHARES S&P/TSX CAPPED ENERGY INDEX ETF (XEG:CT)
Last purchased in December at $19.18.

This ETF seeks to provide long-term capital growth by replicating the performance of the S&P/TSX Capped Energy Index net of expenses. If you believe there is recovery potential in Canadian energy stocks, this 24-stock ETF has a price-to-earnings (P/E) ratio of 12.76, a low expense ratio of 0.61 per cent and represents a relatively safe way to participate.

ISHARES CORE MSCI ALL-COUNTRY WORLD EX CANADA ETF (XAW:CT)
Last purchased in December at $27.79.

This ETF offers global portfolio diversification by investing in a number of ETFs, each representing particular countries or sectors and not including Canada. Country weighting are: U.S., 56.15 per cent; Japan, 7.96 per cent; the U.K., 5.17 per cent; China, 3.79 per cent; France, 3.18 per cent; Germany, 2.59 per cent; and other countries, 21.16 per cent. The ETF is rebalanced quarterly, yields 1.8 per cent and has a low management expense ratio (MER) of 0.22 per cent.

ISHARES CORE CA SHORT TERM CORPORATE & MAPLE BOND ETF (XSH:CT)
Last purchased in November at $19.24.

This ETF gives investors a means to invest in a diversified portfolio of short-term fixed income securities. Largely focused on notes issued by Canadian chartered banks, the ETF offers an alternative to leaving funds in cash but provides full market liquidity. With a low management expense ratio of 0.10 per cent and a yield of 2.8 per cent, the ETF offers a safe place in difficult markets.

PAST PICKS: JAN. 11, 2019

TD BANK (TD:CT)

• Then: $68.83
• Now: $73.86
• Return: 7%
• Total return: 11%

BMO LOW VOLATILITY CANADIAN EQUITY ETF (ZLB:CT)

• Then: $29.79
• Now: $34.85
• Return: 17%
• Total return: 19%

BMO LOW VOLATILITY U.S. EQUITY ETF (ZLU:CT)

• Then: $32.59
• Now: $39.42
• Return: 21%
• Total return: 22%

Total return average: 17%

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