Also available in PDF: MIR Portfolios July 2018
Investment Commentary (July 2018)
Asset Mix
The ongoing US trade protectionism, combined with the retaliation of China, European Union, Canada and Mexico, will lead to a continuation of volatile markets.
Further economic headwinds include rising global interest rates and higher inflation.
Consequently I am recommending an increase in cash of 5% for both portfolios and a reduction in equities of the same amount. I am also advising a reduction of 1% in Emerging Market equities.
Equity Sector bets
I remain overweight the benchmark weight for Financials, Industrials, Consumer Discretionary, Technology and Energy.
I remain underweight Consumer Staples, Utilities, REIT’s and Telcos. However I am materially reducing my underweight in these interest sensitive sectors as they offer attractive dividends and will benefit when rates eventually decline in the next recession.
I remain market weight Healthcare and am reducing the Materials sector to market weight from overweight. The rising US dollar globally, combined with ongoing trade wars, does not bode well for economic growth and commodity precious metals and base metal prices.
I am removing Magna International from both portfolios as a result of a possible cancellation of NAFTA and the Auto Pact.
I am adding a 2% equity weight in the iShares Russell 2000 index that is principally US domestic and thus less affected by the trade wars.
McMurtry Investment Report – Portfolios (July 2018)
Income | Growth | |||
Cash | Alterna Bank – High Interest Savings (2.05% current rate) | Alterna Bank – High Interest Savings (2.05% current rate) | ||
EQ Bank – High Interest Savings ( 2.30% current rate) | EQ Bank – High Interest Savings ( 2.30% current rate) | |||
Bonds | iShares XSB Short Term | iShares XSB Short Term | ||
iShares XFR Floating Rate | iShares XFR Floating Rate | |||
iShares CBO 1-5 Ladder Corp | iShares CBO 1-5 Ladder Corp | |||
iShares CLF 1-5 Ladder Gov’t | iShares CLF 1-5 Ladder Gov’t | |||
Preferreds | Security | Dividend Yield % | Security | Dividend Yield % |
Enbridge Pfd V Enb.pr.V US | 4.19 | Enbridge Pfd V Enb.pr.V US | 4.19 | |
Horizons Active Mgt. Pfd HPR | 3.83 | Horizons Active Mgt. Pfd HPR | 3.83 | |
Industrial Alliance IAG.PR.G | 4.00 | Industrial Alliance IAG.PR.G | 4.00 | |
Common Stocks | Security | Dividend Yield % | Security | Dividend Yield % |
Financials | Royal Bank RY | 3.80 | Royal Bank RY | 3.80 |
National Bank | 3.93 | National Bank | 3.93 | |
TD TD | 3.52 | TD TD | 3.52 | |
CIBC CM | 4.65 | CIBC CM | 4.65 | |
Sun Life SLF | 3.60 | Sun Life SLF | 3.60 | |
JP Morgan JPM US | 2.15 | JP Morgan JPM US | 2.15 | |
Bank of America BAC US | 1.70 | Bank of America BAC US | 1.70 | |
Citibank C US | 1.91 | Citibank C US | 1.91 | |
Goldman Sachs GS US | 1.45 | Goldman Sachs GS US | 1.45 | |
Manulife MFC | 3.73 | Manulife MFC | 3.73 | |
T. Rowe Price TROW US | 2.41 | T. Rowe Price TROW US | 2.41 | |
iUnits US Regional Banks IAT US | 1.71 | iUnits US Regional Banks IAT US | 1.71 | |
Keycorp KEY US | 2.46 | Keycorp KEY US | 2.46 | |
Blackrock BLK US | 2.31 | Blackrock BLK US | 2.31 | |
Paychex PAYX US | 3.28 | Paychex PAYX US | 3.28 | |
PNC Fin’l PNC US | 2.22 | PNC Fin’l PNC US | 2.22 | |
Visa V US | 0.63 | |||
Energy | Suncor SU | 2.69 | Suncor SU | 2.69 |
Freehold FRU | 5.08 | Freehold FRU | 5.08 | |
Whitecap WCP | 3.33 | Whitecap WCP | 3.33 | |
Torc TOG | 3.60 | Torc TOG | 3.60 | |
Pembina Pipe Lines PPL | 5.01 | Pembina Pipe Lines PPL | 5.01 | |
Enbridge ENB | 5.71 | Enbridge ENB | 5.71 | |
Vermilion Energy VET | 5.82 | Vermilion Energy VET | 5.82 | |
Centennial Resources CDEV US | 0.00 | |||
Step Energy STEP | 0.00 | |||
Parex Resources PXT | 0.00 | |||
Materials | Agnico Eagle AEM | 0.91 | Agnico Eagle AEM | 0.91 |
Franco Nevada FNV | 1.33 | Franco Nevada FNV | 1.33 | |
BMO Global Base Metal ETF ZMT | 1.45 | BMO Global Base Metal ETF ZMT | 1.45 | |
Lundin LUN | 1.64 | |||
Trevali Mining TV | 0.00 | |||
Hudbay Minerals HBM | 0.27 | |||
Roxgold ROXG | 0.00 | |||
Industrials | DowDuPont DWDP US | 2.31 | DowDuPont DWDP US | 2.31 |
Applied Materials AMAT US | 1.73 | Applied Materials AMAT US | 1.73 | |
Toromont TIH | 1.62 | Toromont TIH | 1.62 | |
WSP Global WSP | 2.17 | WSP Global WSP | 2.17 | |
Canadian Pacific CP | 1.08 | Canadian Pacific CP | 1.08 | |
General Dynamics GD US | 2.00 | General Dynamics GD US | 2.00 | |
SNC Lavalin SNC | 1.98 | SNC Lavalin SNC | 1.98 | |
Guggenheim Eq WT IND RGI US | 1.22 | Guggenheim Eq Wt IND RGI US | 1.22 | |
Honeywell HON US | 2.07 | Honeywell HON US | 2.07 | |
Fedex FDX US | 1.15 | |||
Consumer Discretionary | Home Depot HD US | 2.11 | Home Depot HD US | 2.11 |
Sleep Canada ZZZ | 2.27 | Sleep Canada ZZZ | 2.27 | |
Stanley Black and Decker SWK US | 1.90 | Stanley Black and Decker SWK US | 1.90 | |
Canadian Tire CTC.A | 2.10 | Canadian Tire CTC.A | 2.10 | |
Amazon AMZN US | 0.00 | Amazon AMZN US | 0.00 | |
Kohl’s KSS US | 3.35 | Kohl’s KSS US | 3.35 | |
Lowes LOW US | 2.01 | Lowes LOW US | 2.01 | |
Carnival Cruise CCL US | 3.42 | Carnival Cruise CCL US | 3.42 | |
Dollarama DOL | 0.94 | |||
Alibaba BABA US | 0.00 | |||
JD.com JD US | 0.00 | |||
Telecom | Rogers B RCI.B | 3.07 | Rogers B RCI.B | 3.07 |
Consumer Staples | Alimentation Couche Tard ATD.b | 0.63 | Alimentation Couche Tard ATD.b | 0.63 |
Loblaws L | 1.75 | Loblaws L | 1.75 | |
Constellation Brands STZ US | 1.36 | Constellation Brands STZ US | 1.36 | |
Unilever PLC UL US | 3.47 | Unilever PLC UL US | 3.47 | |
Technology | Apple AAPL US | 1.58 | Apple AAPL US | 1.58 |
Microsoft MSFT US | 1.70 | Microsoft MSFT US | 1.70 | |
Open Text OTEX | 1.70 | Open Text OTEX | 1.70 | |
Facebook FB US | 0.00 | |||
Nvidia NVDA US | 0.25 | |||
ETFMG Prime Cyber Sec. HACK US | 0.01 | |||
Alphabet GOOGL US | 0.00 | |||
Utilities | Emera EMA | 5.28 | Emera EMA | 5.28 |
Fortis FTS | 4.05 | Fortis FTS | 4.05 | |
Healthcare | Abbott Labs ABT US | 1.84 | Abbott Labs ABT US | 1.84 |
Johnson & Johnson JNJ US | 2.82 | Johnson & Johnson JNJ US | 2.82 | |
Merck MRK US | 3.16 | Merck MRK US | 3.16 | |
US Healthcare iShares ETF IYH US | 1.15 | US Healthcare iShares ETF IYH US | 1.15 | |
United Healthcare UNH US | 1.47 | United Healthcare UNH US | 1.47 | |
Eli Lilly LLY US | 2.64 | Eli Lilly LLY US | 2.64 | |
CVS US | 3.11 | CVS US | 3.11 | |
Thermo Fisher Scientific TMO US | 0.33 | |||
IBB Biotech ETF IBB US | 0.29 | |||
Real Estate | Cdn Apt. REIT CAR.un | 3.12 | Cdn. Apt. REIT CAR.un | 3.12 |
InterRent REIT IIP.un | 2.45 | InterRent REIT IIP.un | 2.45 | |
Summit REIT SMU.un | 5.89 | Summit REIT SMU.un | 5.89 | |
Chartwell REIT CSH.un | 3.84 | Chartwell REIT CSH.un | 3.84 | |
US Small and Mid Cap | iShares Russell 2000 IWM US | 1.12 | iShares Russell 2000 IWM US | 1.12 |
European Equity | iShares MSCI Europe XEU | 2.56 | iShares MSCI Europe XEU | 2.56 |
Emerging Markets | iShares MSCI Emer. Mkts XEC | 2.19 | iShares MSCI Emer. Mkts XEC | 2.19 |
McMurtry Investment Report – Sector Weights (July 2018)
Equity Sector Weights (%) | ||||
Sector | My Weight | TSX Comp | S&P 500 | 65 % US / 35% CDN |
Financials | 22.0 | 33.2 | 13.8 | 20.6 |
Energy | 12.3 | 20.2 | 6.3 | 11.2 |
Materials | 5.8 | 11.7 | 2.6 | 5.8 |
Industrials | 10.3 | 10.0 | 9.5 | 9.7 |
Consumer Disc. | 11.0 | 5.5 | 12.9 | 10.3 |
Telecom | 2.0 | 4.4 | 2.0 | 2.8 |
Consumer Staples | 4.0 | 3.5 | 7.0 | 5.8 |
Technology | 19.1 | 3.9 | 26.0 | 18.3 |
Utilities | 2.0 | 3.5 | 2.9 | 3.1 |
Real Estate | 2.0 | 2.8 | 2.9 | 2.9 |
Healthcare | 9.6 | 1.3 | 14.1 | 9.6 |
Totals | 100.0 | 100.0 | 100.0 | 100.0 |
McMurtry Investment Report Asset Mix (July 2018)
Asset Mix – Income and Growth Portfolios | ||
% | Income | Growth |
Cash | 35.0 | 30.0 |
Bonds | 10.0 | 5.0 |
Preferreds | 15.0 | 10.0 |
Equities | 40.0 | 55.0 |
CDN | 11.0 | 16.3 |
US | 20.5 | 30.2 |
Europe | 5.3 | 5.3 |
Emerging Markets | 3.3 | 3.3 |
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