I hope our June newsletter finds you and your family healthy and happy. Enjoy Canada Day and the fact that we live in the greatest country on earth!!!!
The vote for the United Kingdom to leave the European Union has caused a lot of volatility in the markets in general. However, we are already seeing the Canadian dollar strengthen again and our markets have started to show positive numbers. One effect I think we will see is lower interest rates even longer than had been previously thought. This general state of uncertainty will likely cause the UK and many other countries to keep interest rates at these historic lows longer than many thought.
As I said in my Brexit email, we do not invest by trying to predict the future so our portfolios require very little in the way of tinkering when these type of events occur. I have had confirmation from at least one of our portfolio managers that they are in fact, watching good quality companies very closely to look for buying opportunities.
As of May 31, 2016 the TSX is down about 4.23% over the last 12 months (fortunately, our Canadian fund managers has been keeping ahead of the TSX and we are in positive territory). The S&P 500 (USA) is up 6.6% over the last 12 months but when we convert that back to our Canadian dollar our return becomes positive 1.07% due to the Canadian dollar getting back up near 77 cents. Europe had a loss so far over the last year of 4.98% this past year. Asian markets have a loss now over a year of 4.6%. These returns are all expressed in Canadian dollars and therefore include our gains or losses from a changing Canadian Dollar. Although our one year rates of return are either slightly negative or a small positive I do see some optimism for 2016. (source: Vanguard Canada)
Warren