I have been disappointed by the performance of my emerging markets ETF (XEM.TO) and am concerned that the performance of emerging markets will not be strong (e.g., China). I also want to have some exposure to the US Technology sector, which seems strong. There is not Technology ETF in Canada, but the Nasdaq is very heaving weighted to tech and can be bought using a Canadian ETF (ZQQ.TO).
- Sell XEM @ $26.58
- Buy ZQQ @ $35.88
A month after this trade it seems to have been a good call. The ETF is sold is down 4% and the one purchased is up 1%. That’s a 5% gain.
Two months after this trade it is still a good call, but marginal. XEM is down 1.5% and ZQQ is down 1.0%.
To pave the way to rebuild an “intelligent” portfolio I need to sell my ETFs. Firstly my EAFE and Emerging Market ETFs. The EAFE ETF (XIN.TO) has been very profitable, up 8% since purchase. The Emerging Market ETF (XEM.TO) down 0.8%
- Sell XIN.TO @ $20.22
- Sell XEM.TO @ $24.54
My portfolio balances at close of trading on 31st March were:
||Emerging Markets Fund
||Canadian Dividend Fund
||Canadian Equity Fund
||US Equity Fund
Overall my portfolio is up 0.77% since last month. There were no cash contributions. For comparison my TI Index is up 0.77%, the DOW is up 3.73% (the DOW and S&P500 are at all time highs this month) and the TSX is down 0.56%.
My investments have performed adequately against these indices. Winners this month include my S&P fund up 2.50% and my speculative stocks such as McGraw-Hill (MHP) up 10.25%, StanTec (STN.TO) up 4.89%, and Constellation Software (CSU.TO) up 4.24%*. The main loser was my Emerging Markets Fund (XEM.TO) down 2.59%.
My bond holdings are at 24.6%, which is a little lower than my target of 25%, but acceptable. My speculative portfolio is 8.5% of overall assets, which is less than my 10% maximum, and acceptable.
*Note: The gains in these speculative stocks are not shown in the table above because they were bought after the previous month-end.
As part of my ongoing portfolio rationalization I need to sell Canadian Oil Sands (COS.TO) and iShares Core S&P 500 ETF (IVV). I also need to move my gold holdings to another account – I will sell it here and buy it again later (gold is falling).
This is the account that I plan to use for global equities, and I have selected two ETF: iShares MSCI Emerging Markets Index Fund (XEM.TO) and iShares MSCI EAFE Index Fund (CAD-Hedged) (XIN.TO).
XEM is a three-star rated ETF with high liquidity that holds emerging markets equities. The ETF holds over 800 stocks – the top five are Samsung, Taiwan Semiconductor, China Mobile, China Construction Bank, and Gazprom.
XIN is a three-star rated ETF with high liquidity that holds equities from Europe, Australasia and the Far East. The ETF holds over 900 stocks – the top five are Nestle, HSBC, Novartis, Roche and BP.
- Sell COS.TO @ $20.52
- Sell IVV @ $150.94
- Sell PHY-U.TO @ $13.26
- Buy XEM.TO @ $24.74
- Buy XIN.TO @ $18.73
The trades described above are part of a broad portfolio rationalization that includes many trades. I have performed a single postmortem to cover all of these trades. The postmortem is here.