Market Update
All index returns are total return (includes reinvestment of dividends) and are in Canadian Dollars unless noted. Sources: *Sources: MSCI, FTSE, TMX, S&P
The third quarter of 2024 was an uncharacteristically strong one, with most equity and fixed income markets producing strong returns. The third quarter is historically the weakest quarter of the year, with September being the weakest month, but this year many indexes posted their strongest returns of 2024.
Canadian stocks were strong in the third quarter, with the S&P/TSX Composite Index gaining +10.5%, and pushed the 2024 YTD return to +17.2%. The S&P/TSX Small Cap wasn’t quite as strong, gaining +7.8% for the quarter. The US stock market indexes were more muted; the S&P500 gained +5.9% in the third quarter (+22.1% for 2024). The tech heavy Nasdaq Composite Index had its weakest quarter this year, gaining only +2.6% for the quarter (+21.2% for 2024), while the small cap Russell 2000 Index was up +8.9% (+10.0% for 2024).
EAFE stocks (Europe, Australasia, and Far East) were flat for the second consecutive quarter, but are up +9.4% for 2024 YTD. European stocks were also underwhelming, gaining +1.2% for the quarter, while Japan’s Nikkei 225 lost -2.8% (+15.0% for 2024). Emerging market stocks continued to show strength, with the MSCI Emerging Markets Index gaining +5.7% in the 3rd quarter (+15.8% for 2024). Perhaps investors are beginning to take note of the very attractive valuation in this area.
With the Bank of Canada cutting interest rates by 0.25% in July and September, interest rate sensitive sectors got a significant lift in Q3. The FTSE Canada Universe Bond Index gained +4.7% in the third quarter and is now positive for 2024 (+4.3%), while the FTSE Canada Short Term Bond Index was up +3.4% (+5.0% for 2024). US fixed income was even stronger as the US Federal Reserve surprised with a 0.5% rate cut at their September meeting. The Bank of America (BoA) indexes were strong in Q3: +6.4% for the ICE BoA AAA Corporate Index and +5.7% for the ICE BoA BBB Corporate Index. The riskier high yield indexes performed better: the ICE BoA CCC Corporate Index was up +11.6% and +5.3% for the US High Yield Master II.
Real Estate Investment Trusts (REITs) were one of the top beneficiaries of the interest rate cuts in the third quarter. The S&P/TSX Capped REIT Index gained +23.2% for the quarter, its best quarter in 15 years, and salvaged 2024’s performance turning the year to date positive: +14.9% vs -6.7% at the end of the second quarter.
Oil had a difficult quarter, losing -16.4%, and is now down -4.9% for 2024. The diversified Bloomberg Commodities Index was down -0.8%, as gains on other commodities offset the decline in oil prices.
Portfolio Performance
Performance of the ModernAdvisor portfolios was positive as fixed income and equities had generally strong positive returns for the quarter.
The high interest savings portfolio returned +1.1% in Q3 and +3.4% for 2024 so far.
For more details about the performance of our portfolios, visit our website or see our portfolio factsheets here.
Disclosure:
The performance figures above are a time weighted composite of all accounts being managed to the stated risk level, and include ModernAdvisor management fees plus GST/HST, where applicable. Personal portfolio performance experience may vary. All returns are stated in Canadian dollar terms unless indicated otherwise.
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