Positive Second Quarter for Canadian Market at Last

Petra Carolan - July 30, 2014

For the first time in 5 years, the Canadian equity market had a positive second quarter, up 6.4%, including dividends.  The S&P/TSX Composite Total Return Index is now up 12.9% year-to-date, and a remarkable 28.7% year-over-year. This compares to the S&P 500 Total Return Index in the US, which is up 7.6% year-to-date and 26.4% year-over-year, when adjusted to Canadian dollars.

The Canadian market’s recent outperformance has been fuelled by the Energy sector, the best performing sector on the TSX over the last 1, 3, 6 and 12 months. Banks and Railways have also performed incredibly well, up over 30% each in the past year. All the above sectors are well represented in Leon Frazer portfolios, translating into solid performance gains for clients. including dividends.

S&P/TSX COMPOSITE SURPASSES ALL-TIME HIGH

In an amazing coincidence, the S&P/TSX Composite Index (which does not include dividends) surpassed its all-time high in June 2014, exactly 6 years to the day of the previous all-time daily high of 15,073 on June 18, 2008. This eerie occurrence may conjure up some very scary images for investors who suffered through the next 9 months when the Canadian market fell nearly 50% from its peak to its bottom on March 9, 2009. It is our job to reassure clients that the well-publicized movements of the S&P/TSX Composite Index are largely irrelevant to those saving for, or living in retirement, since the Index ignores the return generated by dividends.

Read full Q2-2014 Quarterly Review