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Dale Jackson

Your Personal Investor


There was still steam in the so-called Trump bump six months into 2017. The U.S. stock rally that came with the surprise election of Donald Trump as president propelled the benchmark S&P 500 by over eight per cent by July first.

For the many Canadians who invest in U.S. equities, that translates into 5.9 per cent in Canadian dollars when you include dividends. Since Canadian equities account for less than three per cent of global equities, U.S. equity is a key asset class for a properly diversified portfolio.

The average U.S. equity mutual fund available on the Canadian market gained 5.2 per cent over the same time period.

Returns over the six-month period span from a 14.3 per cent gain to a loss of 4.6 per cent – once again proving the important function management plays in mutual fund selection. If you have a U.S. equity fund, it’s a great idea to compare returns to the benchmark and average over several time periods. Managers can sometimes be excused for performing poorly in bad markets, but there is no excuse for lagging other managers under the same conditions.

The top performer was the TD U.S. Blue Chip Equity fund. It held a 37.5 per cent weighing in information technology heavyweights like Amazon, Facebook, Google and Microsoft.

At the bottom was the Scotia U.S. Opportunities fund. It managed to lose money with a 35 per cent weighting in consumer stocks, which included dogs like Dollar Tree, Molson Coors, Dollar General and Kroger.

It’s interesting to note the Scotia U.S. equity fund consistently under performs the average U.S. equity fund and the benchmark. In the past 15 years, it has returned an average three per cent annually, while the average U.S. equity fund advanced by five per cent, and the S&P 500 total return index (in Canadians dollars) returned 7.2 per cent.

Management matters.