JMRD Market Observer for January 16th, 2015: JMRD ALL-CAP GROWTH BASKET (ACB) UpdateJanuary 16, 2015
**January 16th Issue of The JMRD Market Observer**
In This Week’s Market Observer
- JMRD Team Updates
- JMRD All-Cap Growth Basket Update
- NBF Markets’ Review – Fourth Quarter 2014
- 2015 Tax Reminders – Tax slips now available electronically as they are issued!
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
JMRD Team Announcements
Exciting team news!
Congratulations are in order as Jaden and Carolyn Ropp are thrilled to announce the arrival of Ashton Ropp, born January 13, 2015, weighing in at a hefty 9lbs 12ozs.
Ashton is also welcomed by his big brother Justin and big sister Anna.
Please join us in congratulating the Ropp family!
A second announcement, it is with mixed emotions that we announce that Erin Finnegan, Investment Associate with the JMRD Wealth Management team since May 2012, has resigned her position to pursue another career opportunity. Erin’s last day with JMRD was today.
Many of you have had the pleasure of dealing with Erin over the past couple of years and I’m sure you will join us in wishing her well in her future endeavors.
Please continue to e-mail the rest of the team for any client service needs.
JMRD ALL-CAP GROWTH BASKET (ACB) Update
JMRD Wealth Management Team is pleased to provide the ACB Basket 2014 return of 7.68%. Since we launched the ACB Basket on October 7th, 2013, it has returned 17.4% annualized, to the end of 2014. The TSX 60 Total Return Index during that time returned 16.75%.
This is already the third Market Observer of 2015. So far we have provided updates on the US Growth Basket and the Maximum Growth ETF Basket. This week we provide comments on the All-Cap Basket before wrapping up the quarterly updates with the DIG Basket next week. Last week, we provided a chart that showed the returns for a number of indices for 2014 – below you will that same chart once again as it is an excellent reference.
There were four primary reasons for the launch of ACB:
1) A great complement to the DIG Basket
- Our flagship portfolio is the Diversified Income & Growth Basket (DIG) and is currently held by over 570 clients.
- Clients who don’t own DIG own some or all of the holdings so exposure to DIG is even larger.
- Clients have been asking for some new names and we listened!
- Diversify Diversify Diversify
2) DIG Basket is getting bigger
- A combination of solid returns and more clients buying have increased total assets in the DIG Basket which makes making changes more difficult to execute
- The larger ‘size’ makes it difficult to add smaller names to DIG from a liquidity point of view.
- However, there are several of these ‘smaller’ or ‘less liquid’ companies that we like and we needed to have a mechanism for all clients to invest in these names
- A NEW BASKET was the answer and the short term results have been encouraging.
- All-Cap means that we are able to invest in any company regardless of size (cap is short for market capitalisation).
- We are excited to get these new companies in more client accounts.
3) The investment environment has changed and we need to adjust; with interest rates currently remaining low, we think that growth equities will perform well
- JMRD All-Cap Growth Basket will have less focus on low-growth / high income companies. Rather, the priority will be to a higher growth / lower dividend strategy.
- We have added another new twist in that stocks selected for the JMRD All-Cap Basket do not need to pay a dividend to be eligible for inclusion.
- We continue to favour those companies that have a history of increasing their dividends and the majority of the stocks in the Basket will pay a dividend.
- Full list below for your information
4) Timing is good
- ACB has been around for over a year now and the main reasons we launched it in the first place still apply
- Our base case is similar to that of 2014 in that we feel the global economy is continuing to gain traction and this improving environment will be favorable for equities.
- Combining this stronger outlook with a low interest rate environment, we feel clients need to be positioned to take advantage of the potential for attractive equity gains.
- A mix of growth and income would be ideal.
- Again, remember asset allocation and diversification
Additional notes and other things in the works:
- For clients interested in the new Basket, we will need to get your Basket form up-dated for coding purposes / please request if you have not already signed up
- The minimum purchase for the new Basket is 4 Baskets or just over $46,000, with subsequent purchases of 1.5 Baskets, or $17,300 at current prices.
- We are working with NBF to lower the minimum purchase amount
A current snapshot of the JMRD All-Cap Growth Basket is below:
NBF Markets’ Review – Fourth Quarter 2014
2014 will go down in the books as a year that defied expectations. Bouts of geopolitical uncertainty, coupled with mixed signals and a lack of clarity on the economic front, set a rather sporadic tone that reverberated through markets; particularly over the last three months of the year.
Volatility, which for all intents and purposes was absent throughout most of the first nine months of the year, spiked in the fourth quarter. Equities were sent reeling into a free fall while bond yields skidded to levels not seen in more than a year. However, equity markets took a turn for the better and gradually recovered all of their losses as the quarter progressed. As for bonds, they managed to hold on to their gains.
Much of the volatility was directly or indirectly related to the selloff in the commodity markets. Oil continued its dramatic decent, as it closed the year at $53 a barrel (down 40% from its high in June). The commodity slumped in the latter half of the year as global growth prospects faltered, oversupply conditions weighed heavily on prices and the U.S. dollar persistently rose against most major currencies.
Spurred in part by the oil price declines, as well as economic sanctions due to its invasion of Crimea, Russia’s currency declined markedly throughout the quarter. In November, the country’s GDP fell by 0.5% and its manufacturing sector declined for the first time in six months (according to the HSBC Purchasing Managers’ Index).
On the monetary policy front, divergence in central bank policy continued to remain apparent over the quarter. While the U.S. Federal Reserve put an end to its bond purchasing program in October, as expected, the Bank of Japan surprised investors with additional quantitative easing measures to counter deflation concerns, frail GDP numbers and flimsy consumer spending (due in part to sales tax increases in Japan). In Europe, ECB President Mario Draghi continues to hint that more intervention will come and many pundits believe the ECB could implement a Quantitative Easing style package sometime in 2015. The European Central Bank (ECB) is being pressured by declining consumer prices that marked their first annual decline in over five years, as well as lack of economic growth. Italy continues to wander into recession territory while France struggles with its respective growth problems.
As in Europe, China continued to struggle with growth concerns. China’s Purchasing Managers Index declined from 50.3 in November to 50.1 in December, indicating further weakness in the region’s manufacturing sector.
2015 Tax Reminders
- 2015 TFSA contributions – contribution limit $5,500.00 can be made in cash or securities.
- 2014 RSP contribution deadline – Monday March 2, 2015. The 2014 maximum RRSP contribution limit is 18% of “earned income” in 2013, to an annual maximum $24,270. The 2015 contribution limit is a maximum of $24,930.
Good news! Tax slips are here!
Through our Online Documents Service, you can now elect to receive your 2014 tax slips electronically, as soon as they are issued! Enjoy easy, secure access to all of your account documents – trade confirmations, prospectuses, portfolio statements and tax slips – in one place!
How to adjust your delivery preferences:
· Sign into our Online Services website by clicking on the “Client Access” button and select the Accounts tab, then the Electronic Documents option. It’s that simple!
Haven’t signed up for Online Services yet?
· 1. Go to nbfwm.ca
· 2. Click on the “Client Access” button
· 3. Click on the “Sign up for Online Services” link at the top of the page
· 4. Follow the instructions and submit
2) “Why Your RSP is Your Best Home for U.S. Stocks” (Financial Post)
3) “Readers Pick: Six retirement hot spots” (Globe and Mail)
Week at a Glance
(See attached Week at a Glance report
Reads of the Week
- “Target Corp’s spectacular Canada flop: A gold standard case study for what retailers shouldn’t do” (Financial Post)
- “How Wal-Mart Beat Target in Canada: Low Prices, Long Underwear” (Bloomberg)
- “Economic Lessons From Switzerland’s One-Day, 18 Percent Currency Rise” (New York Times)
- “Nine must-have (and free) financial apps for 2015” (Financial Post)
- “Cineplex CEO Ellis Jacob on secrets to a successful merger” (Canadian Business)
- “Bill Gross Speaks About Getting Fired at Pimco” (Bloomberg View)
- “How Fake Sports Are Turning Man Cave Dwellers Into Millionaires” (Business Week)
- ·“Breakeven and shut-in prices for oil wells: Kemp” (Reuters)
Monday January 19th – U.S. Markets are closed for Martin Luther King, Jr. Day
Tuesday January 20th – Canadian Manufacturing Sales, U.S. Building Permits, U.S. Housing Starts
Wednesday January 21st – Canadian Wholesale Sales, Bank of Canada Rate Decision, Bank of Canada Releases Monetary Policy Report
Thursday January 22nd – U.S. Initial Jobless Claims
Friday January 23rd – Canadian CPI, Canadian Retail Sales, U.S. Existing Home Sales, U.S. Leading Index
Monday January 19th – None
Tuesday January 20th – Celestica, Delta Air Lines, IBM, Johnson & Johnson, Morgan Stanley
Wednesday January 21st – Kinder Morgan, US Bancorp
Thursday January 22nd– Canadian Pacific Railway, Starbucks
Friday January 23rd – General Electric, McDonald’s
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Categorised in: JMRD Updates