Overview
The first half of 2019 was terrific for financial markets, regardless of whether you were a stock or bond investor. The S&P 500 gained 6.9% last month, its best June since 1955, on its way to a 17% rise during the first 6 months of 2019, its best first half since 1997. The Dow rose 14% during the first 6 months of the year, its best first half since 1999. Canada was not left behind as the S&P/TSX Composite posted nearly a 16% total return. Bonds also did well as can be seen from the following chart below. US investment-grade corporate bonds are having their strongest year ever.
Global Asset Classes June & YTD

Source: Holdun Trestle Management Inc., John MacDougall
U.S.A.
Here’s how four broad stock indexes performed during the first half of 2019.

Source: Philip Van Doorn, ‘Here are the stock market’s winners and losers in the first half of 2019’ (MarketWatch, 1 July 2019)<https://www.marketwatch.com/story/here-are-the-stock-markets-winners-and-losers-in-the-first-half-of- 2019-2019-06-28> accessed 18 July 2019
Here are the 11 sectors of the S&P 500.

Source: Philip Van Doorn, ‘Here are the stock market’s winners and losers in the first half of 2019’ (MarketWatch, 1 July 2019)<https://www.marketwatch.com/story/here-are-the-stock-markets-winners-and-losers-in-the-first-half-of- 2019-2019-06-28> accessed 18 July 2019
Canada
Canada’s TSX TR Index & Sectors June & YTD

Source: Holdun Trestle Management Inc., John MacDougall
Europe
Boosted by a strong initial rebound and recent dovish comments by central bankers, the Stoxx Europe 600 Index advanced 13%, poised for its best returns in the 6 month period since 1998. The gains have come even as European equities remain the most popular short trade for investors around the world. The region’s stock funds have bled money almost non-stop this year.
Fixed Income
Fears for the economy have stoked government bonds as investors fret slowing growth and rock bottom inflation. Treasuries returned just over 5% in the first half as they piled in. In the process more of the yield curve inverted and the world’s pool of negative debt swelled to a record.
Commodities
Commodities have fared well in the first half of 2019 as per the attached chart.

Source: Myra P. Saefong, ‘Here are the best- and worst-performing commodities in the first half of 2019’ (MarketWatch, 28 June 2019)<https://www.marketwatch.com/story/here-are-the-best–and-worst-performing- commodities-in-the-first-half-of-2019-2019-06-28>accessed 18 July 2019
Long-suffering gold bugs have seen the commodity recently break through the US $ 1400 per ounce mark for the first time since 2013. Periods of heightened economic uncertainty tend to see higher demand for gold as an asset.
How Did We Fare?
During the first half of the year, the Holdun Canadian Equity (Model Portfolio) gained 19.2% (in CAD), which outperformed the 16.2% rise in its Canadian benchmark. Over the six-month period, the Holdun Canadian Equity’s relative performance was aided by security selection within consumer discretionary and energy. Our lack of exposure to Information Technology had a negative impact on relative performance. During the same period, the Holdun U.S. Equity (Model Portfolio) gained 23.1% (in USD) and it outperformed its benchmark the S&P 500 Index, which gained 18.5%. The Holdun US Equity’s relative performance was aided primarily through security selection within Consumer Staples, Healthcare and Information Technology. Notwithstanding, the portfolio’s overweight exposure in Healthcare had a negative impact on relative performance.
The Way Forward
We continue to monitor global financial conditions for any signs of recession. We still view Canadian equity and international equity market to be a good place to find attractive equity valuations. We are still concerned about a potential economic downturn which may be on the way. As such, we remain cautious on our asset allocation and believe a balanced portfolio still offers a compelling risk-reward profile.
Returns by Strategy for the YTD |
Holdun |
Benchmark |
Alpha |
Global Equity |
18.6% |
16.5% | 2.1% |
Global Fixed Income |
6.4% |
6.3% | 0.1% |
Global Balanced |
13.7% |
12.5% |
1.2% |
U.S. Equity |
23.1% |
18.5% |
4.6% |
Canadian Equity (in USD) |
24.6% |
20.9% |
3.6% |
Canadian Equity (in CAD) |
19.2% | 16.2% |
3.0% |
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