bmo etf portfolio strategy report · portfolio strategy report third uarter 2015 2 67 68 69 70 71...
TRANSCRIPT
BMO ETF Portfolio Strategy Report
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In this report:
Recent Developments ............... 1
Things to Keep an Eye on ..........2
Changes to the Portfolio Strategy ....................3
Stats and Portfolio Holdings ...................................4
Portfolio Characteristics ..........5
The Good, the Bad, and the Ugly .............................6
All prices or returns as of market close on July 3, 2015, unless otherwise indicated.
Alfred Lee, CFA, CMT, DMS Vice President, BMO ETFsPortfolio Manager & Investment StrategistBMO Asset Management [email protected]
In this report, we highlight our strategic and tactical portfolio positioning strategies for the second quarter using various BMO Exchange Traded Funds. Our key strategy changes are outlined throughout the report and in our quarterly outlook on page six.• The major focal point driving headlines over the next quarter will likely be the potential Greek
exit (“Grexit”) from the European Union (“EU”). AlthoughaGreekdefaultwouldlikelyhavelimiteddirectimpactonCanadianinvestors,theindirectimpactwillbefeltthroughweakerglobalgrowthandthuslowercommodityprices.ContinueduncertaintyovertheGreekcrisiswillbringbackthesafe-haventrade(wheretherewillbeaflighttoquality),despitebondyieldsrisingonthelongendoftheyieldcurveoverthesecondquarter.
• Over the last year, China’s stock market has become disconnected with its underlying economy. TheShanghai Composite Indexhadatotalreturnof133.3%(inlocalterms)intheyearendedMay31,2015despitethegrowingconcernsofadeclininghousingmarket,risinglocalgovernmentdebtandexpandingconsumercredit.TheChinesecentralbankhastakeninitiativetoincreaseliquiditybycuttinglendingratesandrequiredreserveratios(“RRR”),therebyincreasingtheuseofmargininitsstockmarket.Continueduncertaintyintheglobaleconomyanditsdomesticequitymarketmayleadtofurtherde-risking.
• The geopolitical and macro-economic uncertainty in Europe and China respectively, may give the U.S. Federal Reserve (“Fed”) a reason to delay its “lift-off” of raising its overnight rate for the first time since the “Great Recession.” InthelastseveralFederalOpenMarketCommittee(“FOMC”)meetings,theU.S.centralbankhasmadeitclearthatitwillconsiderthebroaderglobaleconomyinsettingitsownmonetarypolicy,despitedatapointsthatsuggestitsowneconomycontinuestoimprove.
• With the ongoing market uncertainties, we expect equity volatility to elevate, particularly in Europe. ThespreadbetweentheVSTOXX 50 Volatility Index (“VSTOXX”)andtheCBOE Volatility Index,whichmeasureimpliedvolatilityofEuropeanandU.S.stocksrespectively,hasbeguntowiden.AlthoughweanticipateabroadbasedEuropeanequitymarketsell-off,thenegativeinvestorsentiment,shouldcreatesomeopportunitiesforlong-terminvestorstoparticipateinhigherqualityEuropeancompanieswithsoundbalancesheets(ChartB).
• The failure of a clear cut resolution between Greece and its creditors should steer the market towards a “risk-off” trade, which will favour longer duration bonds.Wenote,however,thatincreasedvolatilityininterestratesandtheongoingunpredictabilityofcentralbankmonetarypolicybringssignificantriskstolong-termbonds,despitetheirabilitytohedgeequitymarket“tail-risk”.
A Greek Tragedy
Chart A: China RRR Chart B: Implied Volatility Rising Faster in European Equities
Source: Bloomberg Source: BMO Asset Management Inc., Bloomberg
BMO EXCHANGE TRADED FUNDSTh i rd Quar ter 2015
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Things to Keep an Eye on...
WiththedurationoftheoverallCanadianbonduniverseincreasing,themajorityofbondinvestorsarenowmoreexposedtomoreinterestrateriskthantheymaydesire.Inthelastdecadealone,thedurationoftheFTSE/TMX Canada Universe Bond Indexhasincreasedfrom6.2to7.4.Thisisaresultofissuerslookingtocapitalizeonlowerinterestrates.ThoughitisunlikelythattheBoCraisesitsovernightrateinthenearfuture,Canada’slongertermmonetarypolicyremainsuncertain,resultinginvolatilityonthelong-endofthecurve.
Recommendation:Despitethevolatilityinthebondmarket,investorsshouldnotbeeliminatingexposuretofixedincomeintheirportfolio.Inthecontextofportfolioconstruction,bondsplayavitalrole.Althoughbondshaverecentlybecomemoreequity-likebothfromareturnsandriskperspective,ETFsallowinvestorstotargetspecificareasoftheyieldcurve.Bydissectingthebondmarketintosegmentsandmeasuringthembasedonyieldtomaturity(“YTM”)tovolatility(yieldtovolatility),investorscanbettertargetareasthatofferbetterrisk-adjustedyield.
CompaniesintheEurozonewillbedirectlyorindirectlyaffectedbytheongoingdevelopmentsinGreece,butthebroaderEuropeanequitymarketshouldnotbepaintedwiththesamebrush.Asell-offintheregioncouldpotentiallycreatebetterentrypointsforlong-terminvestorsinhigherqualitycompanieswithsoundbalancesheets.Blue-chip,multi-nationalcompaniesdomiciledinEuropehaveglobalrevenuestreamsandmorestableearnings.
Recommendation:WhileaGreekcrisismayputpressureonEuropeanequities,wecontinuetobelieveopportunitiesresideinbroaderEurope.EarningsandrevenuegrowthcouldcontinueforEuropeancompaniesshouldthecrisisremainrelativelycontained.ShouldtheEuropeanCentralBank(“ECB”)respondwithmorequantitativeeasing(“QE”)oroutrightmonetarytransactions(“OMT”),accommodativemeasurestendtobefavourableforequities,althoughnegativeforacurrency.BMO MSCI Europe High Quality Hedged to CAD Index ETF (ZEQ)providesequitymarketexposureandhedgestheCAD/EURexposure.
Source: BMO Asset Management Inc., Bloomberg
AlthoughwehavebeendecreasingourexposuretoU.S.equitiesoverthelastseveralquarters,westillremainbullishonU.S.equities.OneareaoftheU.S.equitymarketthatwehaveoverweightedinourportfoliostrategyisitsbankingsector.TheU.S.yieldcurve,whichsteepenedoverthesecondquarterinanticipationofaU.S.FederalReserve(“Fed”)overnightrate“lift-off,”hasbenefittedU.S.banks,whichborrowontheshort-endandlendonthelong-endofthecurve.Thisquarter,wewilllikelyseetheyieldcurvereversecourseintheU.S.asglobalmarketuncertaintieswillpushlongbondpricesupandyieldsdown,whichmayweighonU.S.banks.
Recommendation:Inadditiontoapotentialchangeintheyieldcurve,therearenumberofpush-pullfactorsatplaywithU.S.banks.AstrengtheninghousingmarketandreturningconsumerconfidenceshouldbebeneficialforU.S.banksasawhole,butanumberofU.S.bankshaveglobalexposurewithdirectorindirectexposuretoEurope.Despite,theuncertaintyinU.S.banks,wecontinuetoremainpositiveonthesectorandwecontinuetoholda4.0%positionintheBMO Equal Weight U.S. Banks Index ETF (ZBK).AlthoughtheU.S.banksmaybecomemorevolatile,ZBKhasahighexposuretoregionalbankswhicharemoreexposedtothedomesticU.S.economy.Additionally,theequalweightingstrategy,couldhelpmitigatecompanyspecificrisk.
Source: Bloomberg
Source: Bloomberg
Portfolio Strategy Report – Third Quarter 2015 3
Changes to Portfolio StrategyAsset Allocation:
• BondmarketvolatilityhasremainedelevatedgiventhehighcompositionoflongdurationbondsintheoverallCanadianfixedincomeuniverse.WiththeGreekdebtcrisiscomingtotheforefront,however,bondsmaybenefitoverthecomingquarterduetothesafe-haventrade.Equitymarketvolatility,whichwaswellbelowlong-termaveragespriortoGreecedefaultingonitsdebtpayment,indicatesthatriskswerenotfullypricedintothemarket.Despitethesignificantdevelopmentsoverthelastmonthintheglobaleconomy,wewillnotbemakingdrasticchangestoourportfoliostrategythisquarter.Ourportfoliostrategyhasalreadybeenpositioneddefensively,wellbalancedbetweenequities,bondsandnon-traditionalassets.
Fixed Income:
• Aspreviouslymentioned,wearebecomingincreasinglyconcernedaboutthesteadilyrisingdurationoftheoverallfixedincomeuniverse.AlthoughtheBMO Discount Bond Index ETF (ZDB)providestaxefficientexposuretotheoverallCanadianbonduniversebymatchingtheportfolio’syieldtomaturityandcoupon,wearedecreasingourexposuretothisETFsinceitseekstomaintaintheoverallcharacteristicsoftheFTSE/TMX Canada Universeandhasadurationof7.4.Thisquarter,wearereducingourweightinZDBby3.0%andallocatingtheproceedstotheBMO Mid Corporate Bond Index ETF (ZCM),whichhasashorterdurationof6.1.
Equities:
• Overthelastseveralquarters,wehaveincreasedourweightingtoEuropeanequitiesthroughboththeBMO MSCI Europe High Quality Hedged to CAD Index ETF (ZEQ)andtheBMO International Dividend ETF (ZDI),andweremaincontentinourgeographicalallocation.Asmentionedonthepreviouspage,ZEQscreensforhigherqualitycompaniesthatexhibithighreturnonearnings(“ROE”),lowyear-over-yearearningsvariabilityandlowfinancialleverage.LookingatthebalancesheetoftheETF’sconstituents,ZDIscreensforstockswithgrowingdividendyieldsandsustainablepayoutratios.WhiledeterioratingsentimentonEuropeanequitiesmaybeanear-termheadwind,webelievethatthe“smartbeta”approachthatthesetwoETFsutilizemaybettermitigatelong-termrisksrelativetotheirmarket-capitalizationweightedcounterparts.
• WhileitisunclearhowmuchcontagionriskaGreekdefaultposes,thepotentialofcontagiontothebroaderEuropeaneconomyismorelikelyshouldItalyand/orSpaindefault.OngoingheadlinesofGreeceincomingmonthswilllikelykeepequityvolatilityhigherthanhistoricalnorms.ThemajorityofourcoreequitypositionsremaindefensivelypositionedwithexposurestoboththeBMO Low Volatility Canadian Equity ETF (ZLB)andtheBMO Low Volatility U.S. Equity ETF (ZLU).UtilizinglowvolatilityETFsshouldhelpmitigatevolatilityshouldmarketsreactnegativelytoheadlineriskandremainequitizedshouldmarketsrallyonaresolutionbetweenGreeceanditscreditors.
Non-Traditional:
• WebelievepreferredsharesofferattractivevaluationsinthewakeofJanuary’sBoCsurpriseratecut.Despiteourexpectationsthatvolatilitywillremainhigherthanhistoricalnorms,preferredsharesofferanattractivecurrentyieldanditsdistributionsaretaxedasdividendsratherthanincome.Wecontinuetoholda5.0%weightingintheBMO S&P/TSX Laddered Preferred Share Index ETF (ZPR),whichholdsrateresetpreferredsharesinaladderedstructure.Rateresetpreferredsharesprovidemitigationagainstrisingrates.WhiletheBankofCanada(BoC)maypotentiallycutitsovernightrateagain,preferredsharesofferattractivecurrentyields.Unlike2008and2009,theweaknessinthepreferredsharemarketisnotsolvencyrelatedbutentirelyinterestraterelated.Preferredsharesoffertaxefficientyieldforthosethatcanacceptthenear-termvolatility.
Sell/Trim Ticker (%) Buy/Add Ticker (%)
BMO Discount Bond Index ETF ZDB 3.0% BMO Mid Corporate Bond Index ETF ZCM 3.0%
Total 3.0% Total 3.0%
Portfolio Strategy Report – Third Quarter 2015 4
Ticker ETF Name Position Price MER1 Weight (%)
90-Day Vol
Volatility Contribution
Yield (%)*
Yield/Vol
Fixed Income
ZDB BMO DISCOUNT BOND INDEX ETF Debt Core $15.89 0.20% 11.0% 5.3 5.6% 2.1% 0.39
ZIC BMO MID-TERM U.S. IG CORPORATE BOND INDEX ETF Debt Tactical $17.87 0.25% 10.0% 11.1 10.7% 3.7% 0.33
ZCM BMO MID CORPORATE BOND INDEX ETF Debt Tactical $16.37 0.12% 12.0% 5.7 6.6% 3.6% 0.62
Total Fixed Income 33.0% 22.9%
Equities
ZLB BMO LOW VOLATILITY CANADIAN EQUITY ETF Equity Core $26.71 0.35% 8.5% 9.2 7.5% 2.7% 0.30
ZDV BMO CANADIAN DIVIDEND ETF Equity Core $16.55 0.35% 5.0% 9.9 4.8% 4.7% 0.47
ZLU BMO LOW VOLATILITY U.S. EQUITY ETF Equity Core $25.36 0.10% 9.0% 13.2 11.4% 2.8% 0.21
ZDI BMO INTERNATIONAL DIVIDEND ETF Equity Core $20.78 0.40% 11.0% 14.9 15.7% 5.4% 0.36
ZEQ BMO MSCI EUROPE HIGH QUALITY HEDGED TO CAD ETF Equity Tactical $17.03 0.40% 7.0% 15.9 10.7% 2.7% 0.17
ZWB BMO COVERED CALL BANKS ETF Equity Tactical $16.13 0.65% 3.0% 10.3 3.0% 6.5% 0.64
ZEO BMO S&P/TSX EQUAL WEIGHT OIL & GAS INDEX ETF Equity Tactical $11.64 0.55% 3.0% 18.5 5.3% 4.2% 0.23
ZWA BMO COVERED CALL DOW JONES INDUSTRIAL AVERAGE HEDGED TO C$ ETF Equity Tactical $19.46 0.65% 3.0% 11.2 3.2% 5.9% 0.53
ZBK BMO EQUAL WEIGHT U.S. BANKS INDEX ETF Equity Tactical $19.18 0.35% 4.0% 17.0 6.5% 2.1% 0.12
Total Equity 53.5% 68.3%
Non-Traditional/Hybrids
ZFH BMO FLOATING RATE HIGH YIELD ETF Debt Tactical $14.73 0.40% 3.5% 7.2 2.4% 4.7% 0.65
ZPR BMO S&P/TSX LADDERED PREFERRED INDEX ETF Debt Tactical $11.93 0.45% 5.0% 7.4 3.6% 4.9% 0.66
ZEL BMO EQUITY LINKED CORPORATE BOND ETF Debt Tactical $20.05 0.40% 5.0% 5.7 2.7% 3.8% 0.66
Total Alternatives 13.5% 8.7%
Total Cash 0.0% 6.1 0.0% 0.0%
Portfolio 0.32% 100.0% 10.4 100.0% 3.7% 0.361 MER as of July 3, 2015
Ticker Top Holdings Weight
ZCM BMO MID CORPORATE BOND INDEX ETF 12.0%
ZDB BMO DISCOUNT BOND INDEX ETF 11.0%
ZDI BMO INTERNATIONAL DIVIDEND ETF 11.0%
ZIC BMO MID-TERM U.S. IG CORPORATE BOND INDEX ETF 10.0%
ZLU BMO LOW VOLATILITY U.S. EQUITY ETF 9.0%
ZLB BMO LOW VOLATILITY CANADIAN EQUITY ETF 8.5%
ZEQ BMO MSCI EUROPE HIGH QUALITY HEDGED TO CAD ETF 7.0%
ZDV BMO CANADIAN DIVIDEND ETF 5.0%
ZPR BMO S&P/TSX LADDERED PREFERRED INDEX ETF 5.0%
ZEL BMO EQUITY LINKED CORPORATE BOND ETF 5.0%
ZBK BMO EQUAL WEIGHT U.S. BANKS INDEX ETF 4.0%
ZFH BMO FLOATING RATE HIGH YIELD ETF 3.5%
ZWB BMO COVERED CALL BANKS ETF 3.0%
ZEO BMO S&P/TSX EQUAL WEIGHT OIL & GAS INDEX ETF 3.0%
ZWA BMO COVERED CALL DOW JONES INDUSTRIAL AVERAGE HEDGED TO C$ ETF 3.0%
Core 44.5%
Tactical 55.5%
Cash
Alternatives
Equities
Fixed Income
Stats and Portfolio Holdings
Investment Objective and Strategy: The strategy involves tactically allocating to multiple asset-classes and geographical areas to achieve long-term capital appreciation and total return by investing primarily in exchange traded funds (ETFs).
Non-Traditional (11.5%)
Equities (55.5%)
Fixed Income (33.0%)
*Yieldcalculationsforbondsisbasedonyieldtomaturity,whichincludescouponpaymentsandanycapitalgainorlossthattheinvestorwillrealizebyholdingthebondstomaturityandforequitiesitisbasedonthemostrecentannualizedincomereceiveddividedbythemarketvalueoftheinvestments.
**Cashisbasedoffthe3-quarterCanadianDealerOfferedRate(CDOR).
Portfolio Strategy Report – Third Quarter 2015 5
Portfolio Characteristics
Financials 27.7%
Health Care 7.8%
Industrials 7.5%
Information Technology 3.0%
Materials 4.1%
Telecommunication Services 4.9%
Utilities 10.1%
Consumer Discretionary 10.4%
Consumer Staples 12.0%
Energy 12.4%
Canada 52.5%
United States 29.5%
Europe 15.2%
Asia 2.8%
Federal 9.9%
Provincial 9.0%
Investment Grade Corporate 72.7%
Non-Investment Grade Corporate 8.4%
Weighted Average Term 7.60
Weighted Average Duration 5.94
Weighted Average Coupon 3.5%
Weighted Average Current Yield 3.3%
Weighted Average Yield to Maturity 2.8%
Equity Sector Breakdown
Regional Breakdown (Overall Portfolio)
Fixed Income Breakdown
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
Emerging Markets
United States
Canada
WeightedAverageCurrentYield:Themarketvalueweightedaveragecoupondividedbytheweightedaveragemarketpriceofbonds.
WeightedAverageYieldtoMaturity:Themarketvalueweightedaverageyieldtomaturityincludesthecouponpaymentsandanycapitalgainorlossthattheinvestorwillrealizebyholdingthebondstomaturity.
WeightedAverageDuration:Themarketvalueweightedaveragedurationofunderlyingbondsdividedbytheweightedaveragemarketpriceoftheunderlyingbonds.Durationisameasureofthesensitivityofthepriceofafixedincomeinvestmenttoachangeininterestrates.
*Regional Breakdown includes equities, fixed income and alternative sleeves.
Portfolio Strategy Report – Third Quarter 2015 6
The Good, the Bad, and the Ugly
Conclusion: BothGreeceandChinawilldriveheadlineriskoverthenextquarter,whichwillputpressureonglobalgrowth.Although,thedirectimplicationstoCanadashouldbeminimal,oureconomywouldbeindirectlyaffectedbylowercommodityprices.AnindefiniteresolutionbetweenGreeceanditscreditorsandafailurebythePeople’sBankofChina(PBOC)toengineerasoftlandinginitsstockmarketwillcreateanoverhangonriskassetsandglobalgrowthexpectations.WeexpectthistoputpressureontheBankofCanadatoconsiderloweringitsovernightrate.Defensiveareasofthemarketwilllikelyoutperformoverthequarterwithbondyieldsremainingvolatileastheoverhangremains.
Global-Macro/Geo-Political Fundamental Technical
Good
• DatacontinuestosuggesttheU.S.economicrecoverycontinueswithunemploymentnowat5.3%,constructionspendingontheriseandISMmanufacturingabove50.
• U.S.existinghomesalescontinuestoremainsteadyregistering5.35millionunitsinJune2015.
• Eurozonemanufacturingisstillabove50,whichsuggestsexpansiondespitetheongoingconcernsinEurope.
• OngoingpressureoncommoditieswilllikelykeepinterestrateslowinCanada,whichshouldbenefitCanadians,whichcurrentlyhavehighhouseholddebtlevels.
• DespitethepositiveeconomicdataintheU.S.,theFederalReservemaylookatbroader.economywhendecidingwhentoraiseitsovernightrate.
• LowvolatilitystocksaretradingatapremiuminCanada,butwithongoingmacro-economicconcerns,highervaluationsarejustified.
• TheCanadianREITindustryiscurrentlytradingataP/CFof13.6x,a7.8%premiumtoits10-yearaverage.ApersistentlowinterestrateenvironmentshouldbegoodforREITs,aslongasadeteriorationintheeconomynotweighsignificantlyonoccupancyrates.
• LowerbetastocksinCanadacontinuetogainrelativestrengthagainsttheS&P/TSXCompositeIndex.WeexpectlowvolatilitystockstooutperforminCanada.
• Wecontinuetoexpectcorrelationsbetweenandwithinassetclassestodriftloweroverthelong-term.Amarketsell-off,however,wouldcausecorrelationstoriseintheshort-term.
• Short-termmomentuminEuropeanstocksisdeclining,potentiallycreatingabuyingopportunity.However,arisk-offtradewouldcausecorrelationstoriseovertheshort-term.Overthelonger-term,wearebullishonhigherqualityEuropeanstocks.
Bad
• AGreekexitmaycausedownstreameffectstotheEuropeanUnion.FocusmayshifttootherindebtedmembersoftheEU.
• UnemploymentinCanadacontinuestoholdat6.8%.Weakerglobaleconomycouldpostponeplansforfirmstohire.
• China’sstockmarketfinallylookstobereflectiveoftheunderlyingeconomicconcerns.
• TheHSBCChinaManufacturingPMIIndexagaindippedlowerto49.4%.Avalueoflessthan50%suggestsacontractingmanufacturing.
• ArisingU.S.dollarmaycausetheFederalReservetodelayitsratehike.
• Trailing12monthEPSfortheS&P500CompositeIndexisathistorichighs.Continuedpriceexpansionsareunlikelytobemetwithearningsgrowth.
• ThecurrentP/EratiooftheS&P/TSXComposite is20.0x.Therecontinuestobeadivergencebetweenthevaluationofdefensiveorientedstocksandcyclicalstocks.
• Canadianenergystocksaretrendinglower,currentlytestingprevioussupportlevels.
• OngoingheadlineriskofGreeceandtheU.S.willbenefitthesafehaventrade.ThisshouldbenefittheU.S.dollarandtheJapaneseYen,whichhavebrokenout.
• Equitymarketvolatilityhasrecentlybrokenout,butstillremainlowerthanitslongtermaverage.Furthernegativedevelopmentscouldtakevolatilityhigher.
Ugly
• OurconcernsabouttheCanadianeconomycontinuetomount.Householddebttoincomelevelshavebeenrunningathistorichighs.Acombinationofloweroilpricesandpotentiallyfallingrealestateprices,willplacepressureontheCanadianhousehold.
• OilsupplycontinuestobuildwithasurpluscomingfromOPECandreportedlyCanada.
• ThevaluationoftheAthensStockExchange(ASE) hascomeoffsignificantlyintermsofitsP/Eratio.WithitscurrentP/Estillat23.6x,itsmarketisstilltradingrich,givenitsongoingeconomicconcerns.
• Themargindebt levelscontinuetobeourgreatestconcernasitisatall-timehighs.Asizablemarketsell-offwouldlikelyleadadeleveragingeventmoreseverethanthegreatfinancialcrisisof2008-2009.
• CommodityrelatedcurrenciessuchastheCanadiandollar,NorwegianKronaandtheAustraliandollarwilllikelycontinuetoweakenrelativetotheU.S.dollar.Loweroilpricescouldcauseinterestratestodiverge,thesafehaventradewillputfurtherpressureoncommoditycurrencies.
”S&P®” and “S&P 500®” are trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and “TSX” is a trademark of TSX Inc. These trademarks have been licensed for use by S&P Dow Jones Indices LLC and sublicensed to BMO Asset Management Inc. in connection with ZSP, ZIN and ZPR. ZSP, ZIN and ZPR are not sponsored, endorsed, sold or promoted by S&P Dow Jones LLC, S&P, TSX, or their respective affiliates and S&P Dow Jones Indices LLC, S&P, TSX and their affiliates make no representation regarding the advisability of trading or investing in such ETFs.
The Dow Jones Industrial Average Index is a product of S&P Dow Jones Indices LLC and has been licensed for use by the BMO Asset Management Inc. Dow Jones®, Dow Jones Industrial Average®, and DJIA® are registered trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”), and have been licensed to S&P Dow Jones Indices LLC and and sublicensed for use by BMO Asset Management Inc. in connection with ZWA. ZWA is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, or their respective affiliates, and S&P Dow Jones Indices LLC, Dow Jones and their respective affiliates make no representation regarding the advisability of trading or investing in such ETF.
The exchange traded funds referred to herein are not sponsored, endorsed or promoted by MSCI, and MSCI bears no liability with respect to any such exchange traded funds or any index on which such exchange traded funds are based. The prospectus contains more detailed description of the limited relationship MSCI has with BMO Asset Management Inc. and any related exchanged traded fund.
This communication is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individual’s circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.
BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager, and separate legal entity from Bank of Montreal.
Commissions, management fees and expenses all may be associated with investments in exchange traded funds. The indicated rates of return are the historical annual compound total returns including changes in prices and reinvestment of all distributions and do not take into account commission charges or income taxes payable by any unitholder that would have reduced returns. Please read the prospectus before investing. Exchange traded funds are not guaranteed, their value change frequently and past performance may not be repeated.
® “BMO (M-bar roundel symbol)” is registered trade-mark of Bank of Montreal, used under licence.
Visit bmo.com/etfs or contact Client Services at 1-800-361-1392.
Portfolio Strategy Report – Third Quarter 2015 7