Getting out of emerging markets

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

Update

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.

Screen Shot 2015-11-30 at 10.13.10 PM

Additional Update

Two months after this trade it is still a good call, but marginal. XEM is down 1.5% and ZQQ is down 1.0%.

Screen Shot 2015-12-27 at 2.14.11 PM

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Portfolio Update – Up 0.77% in March 2013

My portfolio balances at close of trading on 31st March were:

Ticker Price (C$) Price Change Percentage Industry
T.TO $ 70.16 -1.03% 0.0% Telecommunications
STN.TO $ 44.75 n/a 1.8% Services
BEP-UN.TO $ 29.77 n/a 0.0% Energy
CSU.TO $ 124.88 n/a 1.9% Information Technology
WPK.TO $ 19.30 n/a 1.5% Consumer Goods
MHP $ 52.97 n/a 1.9% Services
YHOO $ 23.93 n/a 1.5% Information Technology
CGL.TO $ 14.22 n/a 5.0% Gold Fund
XEM.TO $ 24.47 -2.59% 9.5% Emerging Markets Fund
XIN.TO $ 19.41 1.84% 9.7% EAFE Fund
XDV.TO $ 22.30 -0.93% 10.5% Canadian Dividend Fund
XIU.TO $ 18.34 -1.45% 10.2% Canadian Equity Fund
S&P Fund $ 135.41 2.50% 21.2% US Equity Fund
Bond Fund $ 226.18 0.44% 24.6% Bond Fund
Cash 0.7% Cash
Total 100.0%

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.

Screen Shot 2013-03-31 at 11.46.02 AM

*Note: The gains in these speculative stocks are not shown in the table above because they were bought after the previous month-end.

Getting out of Canadian Oil Sands, Adding Global Funds

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

POSTMORTEM

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.