Full episode: Market Call Tonight for Wednesday, July 26, 2017
David Cockfield, managing director and portfolio manager at Northland Wealth Management
Focus: Canadian equities and ETFs
The recent TSX downward market trend is depressing, as lower highs are followed by lower lows — a negative technical pattern. There has not been, as yet, a period of base building by the TSX to indicate that the correction, though mild, is over. There are valid reasons for Canadian investors to be nervous. Upcoming trade negotiations with the U.S. are likely to prove difficult. The recent increase in the Canadian bank rate has triggered a sharply higher Canadian dollar that will hurt Canadian exporters. Real estate markets in Vancouver and Toronto, facing new regulations, are showing declining sales volumes, and in the case of Toronto actual price declines. Hopefully some good news in the upcoming second quarter earnings reports will help reverse the TSX downward trend. The economic background remains positive, with Canada’s recent GDP the best in the Group of Seven and our employment numbers very encouraging.
BMO LOW VOLATILITY U.S. EQUITY ETF (ZLU.TO)
This low volatility ETF offers exposure to 99 low market sensitive U.S. large cap stocks. The portfolio is not static being rebalanced mid-year and reconstructed at year’s end. ZLU’s recent sharp decline is mainly due to the rise in the Canadian dollar versus the U.S. dollar. Since this jump in the Canadian dollar is likely over, ZLU can be expected to return to its normal pattern of outperformance. With a low expense ratio of 0.33 and a BETA of 0.67, ZLU does particularly well in volatile markets. Last purchased in July at $29.10.
BMO U.S. HIGH DIVIDEND COVERED CALL ETF (ZWH.TO)
An ETF designed to give investors exposure to a U.S. dividend-focused portfolio. Income is expanded by the writing of call options. Securities in the diversified portfolio are chosen for dividend growth, sustainability and option liquidity. Management expense is 0.71 per cent and the yield is an excellent 5.9 per cent. This ETF has suffered from the recent sharp rise in the Canadian dollar versus the U.S. Last purchased in July at $19.42.
INTER PIPELINE (IPL.TO)
This is a Calgary-based pipeline that transports and stores oil and natural gas liquids. IPL has long-term service agreements with major high-quality producers, which gives it utility characteristics. The stock has suffered with the rest of the energy industry and now has an attractive yield of 6.6 per cent. Last purchased in July at $24.99.
PAST PICKS: JULY 8, 2016
- Then: $61.26
- Now: $58.29
- Return: -4.84%
- TR: -0.23%
CRESCENT POINT ENERGY (CPG.TO)
- Then: $19.98
- Now: $9.83
- Return: -50.80%
- TR: -49.62%
SUN LIFE FINANCIAL (SLF.TO)
- Then: $41.05
- Now: $47.61
- Return: +15.98%
- TR: +20.25%
TOTAL RETURN AVERAGE: -9.86%