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

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MARKET OUTLOOK

The TSX has rallied back close to levels reached at the beginning of this year. Despite uncertainties stemming from NAFTA not being renewed and negotiations still ongoing, the economic background remains positive. The U.S. economy has yet to feel the full positive impact of the recent tax cuts and strong economic growth south of the border will be good for Canada. Corporate earnings continue to show gains and encourage management to raise dividends.

We anticipate the TSX will reach record levels in the second half of 2018 to provide an annual return for the TSX over the year of 6 to 7 per cent. Volatility will continue given the unpredictability of political events, but there's little prospect of a recession in the near term. 

TOP PICKS

VANGUARD FTSE EMERGING MARKETS ALL-CAP INDEX ETF (VEE.TO)

This ETF seeks to trace the performance of a broad emerging markets index. The top country allocations are China (34.4 per cent), Taiwan (14 per cent), India (11.2 per cent), Brazil (8 per cent) and South Africa (7.3 per cent). Top sector weightings are financials (28.7 per cent), technology (14.8 per cent), consumer services (11 per cent), industrials (10.7 per cent) and consumer goods (8.9 per cent). VEE gives investors an opportunity to participate in growth outside of Europe or North America. The management expense ratio (MER) is low at 0.24 per cent. Last Purchased in April at $34.90.

ISHARES CORE S&P/TSX CAPPED COMPOSITE INDEX ETF (XIC.TO)

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 full diversification at a low cost 0.06 per cent. Last purchased in May at $25.73.

ISHARES CORE MSCI ALL-COUNTRY WORLD EX-CANADA INDEX ETF (XAW.TO)

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: 53.32 per cent in U.S., 8.64 per cent in Japan, 6.17 per cent in the U.K., 3.64 per cent in China and 3.4 per cent in France. MER is a low 0.22 per cent. Last purchased in February at $25.80.

PAST PICKS: MAY 18, 2017

BMO MSCI EUROPE HIGH QUALITY EQUITIES HEDGED TO CAD INDEX ETF (ZEQ.TO)

• Then: $20.19
• Now: $20.59
• Return: 2%
• Total return: 4%

ISHARES NORTH AMERICAN TECH ETF (IGM.US)

• Then: $143.73
• Now: $192.15
• Return: 34%
• Total return: 34%

BCE (BCE.TO)

• Then: $60.26
• Now: $54.59
• Return: -9%
• Total return: -5%

Total return average: 11%

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