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It’s a good time to be in the stock market. Not only are the major North American indexes hitting new records, but foreign exchanges, with the exception of China, are also doing well. So it should come as no surprise that my Internet Wealth Builder Global Portfolio is churning out decent gains.
This portfolio invests in passive ETFs that cover most of the world’s markets, with a heavy weighting to Canada and the U.S. It was launched in March 2012. It is designed to provide an international model for growth-oriented investors, with the diversification and low costs that ETFs offer. The target annual rate of return is 8%-10%.
The portfolio invests in eight domestic, American, and international ETFs, covering all parts of the globe. Investors should only track this portfolio if they are willing to accept stock market risk.
Here’s a look at how the portfolio has performed since the last update in March. Results are as of the close on Sept. 25.
iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC). This ETF tracks the performance of the S&P/TSX Composite Index. The TSX recently hit a record high, and we saw an increase of $2.56 per unit in the latest period. We received two quarterly distributions for a total of $0.521 per unit.
iShares S&P/TSX Small Cap Index ETF (TSX: XCS). This ETF tracks Canadian small cap stocks. Small caps continued to gain in the latest period and the units increased in value by $1.77. We received two quarterly distributions totaling $0.197 per unit.
iShares US Small Cap Index ETF (CAD-Hedged) (TSX: XSU). U.S. small-cap stocks continue to perform well after lagging for a long time. The units were up $1.72 in the latest period. We received a semi-annual distribution in June of $0.159 per unit.
iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX: XSP). This ETF tracks the performance of the S&P 500. It posted a gain of $4.71 during the March-September period. We received a mid-year distribution of $0.28 per unit.
BMO Nasdaq 100 Equity Hedged to CAD Index ETF (TSX: ZQQ). This fund provides exposure to the top 100 stocks on the Nasdaq exchange. Despite the recent pull-back in the tech sector, this ETF posted a gain of $10.99 in the latest period. There were no distributions.
iShares MSCI EAFE Index ETF (CAD-Hedged) (TSX: XIN). This ETF tracks markets in Europe, Australasia, and the Far East. Despite the ongoing problems in China, the stock markets in those countries posted modest positive returns during the period, and these units gained $0.34. We received a semi-annual distribution of $0.526 per unit in June.
iShares MSCI Frontier and Select EM ETF (NYSE: FM). This ETF holds major companies in so called “frontier” countries from Nigeria to Vietnam, as well as some emerging markets stocks. These markets have not done well for us, but the latest period was close to break-even when the distribution is added.
iShares MSCI Emerging Markets ETF (NYSE: EEM). After a long losing streak, emerging markets are on a run. After a gain of $3.07 per unit in the previous six-month period, these units added another $3.90 between March and September. We received a mid-year distribution of US$0.29 per unit.
We had cash and retained income of $1,495.90 , which we kept with Duca Credit Union at 5.25% interest. We received $39.27.
Here’s a look at how the portfolio stood at the close on Sept. 25. The Canadian and U.S. dollars are treated at par, and commissions are not considered. The percentage in the Gain/Loss column represents the cumulative return since the portfolio was launched or since the security was added. The initial book value was $20,002.30.
After taking a hit in 2022, the portfolio did well in 2023, and that pattern continues. The total value as of Sept. 25 was $66,000.66, up 7.37% from the March review.
The biggest surprise was the emergence of EEM as the top performer in the period, with a gain of 9.5%. XSP was up 8.6% while Nasdaq (ZQQ) added 8.5%.
As a result, our cumulative gain since inception improved to 220%. That works out to a compound average annual growth rate of 9.75%. That’s close to the top of our original target range.
The portfolio is performing as expected. I see no need to replace any components, and we don’t have enough retained earnings in any position to make any significant additional purchases. So, we’ll stand pat for now.
We will move our cash and retained income of $1,954.24 to the EQ Financial 30 Day Notice Savings Account, which is paying 4.25%.
I’ll review the portfolio again in March.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
Notes and Disclaimer
Content © 2024 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/peshkov
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