David Cockfield's Top Picks: March 7, 2019

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

MARKET OUTLOOK

Equity markets in Canada and the U.S. have rallied impressively in 2019, but the full scope of the rally that began in late December should be viewed as questionable. The TSX and U.S. equity markets were moving sideways, building a base in November 2018 and then falling out of bed in December. The December market was the worst on record. But the economic and corporate background was essentially unchanged, so why the market collapse? Perhaps it was due to hedge funds protecting shorting profits or perhaps due to computer trading. Regardless, the rally in January quickly recovered the losses. 

The market upside potential should be measured from the November base rather than from the December low. This makes the rally much less impressive and upside potential that much greater. The old TSX high in the mid 16,000 level appears reachable as does the Dow level of 26,700. A breakout from those levels to reach new highs is a distinct possibility.

TOP PICKS

ISHARES CORE MSCI ALL COUNTRY WORLD EX-CANADA ETF (XAW.TO)
Last purchased in March at $25.91.

This ETF offers global portfolio diversification by investing in a number of ETFs, each representing particular countries or sectors not including Canada. Country weightings are:

• U.S. – 56.03%
• Japan – 7.89%
• U.K. – 5.4%
• China – 3.71%
• France – 3.17%
• Germany – 2.62%
• Other countries —7.88%

The ETF is rebalanced quarterly, has a yield of 2.3 per cent and the management expense ratio (MER) is a low 0.22 per cent.

ISHARES CORE MSCI EMERGING MARKETS IMI INDEX ETF (XEC.TO)
Last purchased in March at $26.69.

This ETF replicates the performance of the MSCI Emerging Markets Investable Market Index. This allows access to the long-term growth potential of emerging markets. The MSCI Emerging Markets Index captures large-cap and mid-cap stock performance across 24 emerging markets such as Brazil, China, India, South Korea, Mexico, Russia and South Africa. The MER is 0.26 per cent.

ISHARES CORE S&P/TSX CAPPED COMP INDEX ETF (XIC.TO)
Last purchased in March at $25.72.

This ETF seeks to replicate the performance of the S&P/TSX Capped Composite Index. It offers investors a way to participate in Canadian equity markets with the safety of full diversification at a low MER of 0.06 per cent.

PAST PICKS: FEB. 2, 2018

ISHARES NASDAQ BIOTECHNOLOGY ETF (IBB.OQ)

• Then: $112.14
• Now: $109.14
• Return: -3%
• Total return: -3%

VERMILION ENERGY (VET.TO)

• Then: $45.49
• Now: $34.88
• Return: -23%
• Total return: -17%

BCE (BCE.TO)

• Then: $56.37
• Now: $58.97
• Return: 5%
• Total return: 11%

Total return average: -3%

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