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U.S. stock funds get election-year boost

Tuesday, November 13, 2012

SHIRLEY WON

swon@globeandmail.com

What are we looking for?

Best returns among U.S. stock funds this year.

Given that U.S. presidential election years have generally been favourable for markets, especially when the incumbent party wins, let's see how these funds fared to Nov. 6 when President Barack Obama was re-elected.

The screen

We searched for the 15 top returns among the U.S. equity funds. U.S. dollar, segregated and duplicate versions of the funds were excluded.

What did we find?

A sea of Nasdaq and S&P 500 index offerings outpacing active managers.

BMO Nasdaq 100 exchange-traded fund, which tracks 100 of the largest non-financial companies on the Nasdaq Stock Market, led the pack with an 18.1-per-cent gain. Top contributors to performance due to their weight in the index were names such as Apple, Microsoft and Oracle.

Manulife Value marginally edged out TD U.S. Large-Cap Value Currency Neutral as the best actively managed mutual fund with a 14.3-per-cent return. "We have more megacap stocks than we normally do, so that has been a key," said Roger Hamilton, a portfolio manager with Manulife Asset Management (U.S.) LLC. "We have Apple, Microsoft, Google and JPMorgan.... That is where we see value."

Other names such as Express Scripts Holding, Amazon.com, Lowe's Cos. and Amgen have also helped performance this year.

The stock market could be choppy in the coming months as U.S. Congress debates a looming budget crisis tied to spending and tax cuts that could send the U.S. economy into recession, Mr. Hamilton said. "But I think there is a chance of a grand bargain after many, many months - if not a year - of bickering."

After more than a decade of the U.S. market going nowhere, he is "cautiously optimistic" that investors will see longer-term modest returns. The U.S. economy has show signs of improvement, while housing prices appear to have stabilized and consumers are more willing to spend, he said. "Any one year could be good, and the next year could be bad, but [a 10-year annualized return] could be in the mid-to-upper single digits."

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TOP-PERFORMING U.S. EQUITY FUNDS THIS YEAR TO NOV. 6

AssetsYTD % rtn% return to Oct. 31% return by year
Fund nameTickerMER($-mil)(Nov. 6)1 yr3 yr2011201020092008
BMO NASDAQ 100 Hedged Index ETFZQQ-T0.40100.218.1%12.8%2.7%
PowerShares QQQ (CAD Hedged) ETFQQC-T0.3210.317.9%12.5%
TD NASDAQ Index-I1.0298.917.7%12.3%15.4%1.7%16.7%49.2%-43.2%
iShares NASDAQ 100 Index (CAD-Hdgd) ETFXQQ-T0.3915.517.6%12.3%
PowerShares QQQ Class SrA1.752.116.1%10.8%
HBP S&P 500 Index (C$ Hedged) ETFHXS-T0.1614.515.5%14.8%0.9%
BMO S&P 500 Hedged to CAD Index ETFZUE-T0.25244.715.5%15.1%11.2%1.0%11.1%
Altamira US Currency Neutral Index0.64147.415.1%13.9%11.5%0.3%13.0%22.4%-40.1%
iShares US Fundament Idx-C$Hgd Com ETFCLU-T0.75122.315.0%14.6%11.6%-1.5%16.7%28.5%-42.6%
RBC U.S. Index Currency Neutral0.70252.614.8%14.0%11.3%0.3%12.6%22.7%-40.5%
CIBC Nasdaq Index1.2456.614.6%12.1%13.4%4.5%12.9%29.7%-27.7%
TD U.S. Index Currency Neutral-I0.89110.414.6%13.9%11.0%-0.1%12.4%21.7%-39.3%
iShares S&P 500 Index (CAD-Hgd) ETFXSP-T0.251,539.114.4%13.5%11.7%1.0%13.5%22.9%-40.3%
Manulife Value2.5851.714.3%13.2%6.2%-7.1%7.8%12.4%-42.0%
TD US Large-Cap Value Curr Neutral-I2.627.814.2%13.7%8.7%-3.9%11.2%19.2%-39.4%
NASDAQ Composite ($ Cdn)14.1%11.6%10.5%0.4%11.1%23.0%-26.3%
S&P 500 Composite Total Return Idx($Cdn)13.0%15.9%10.4%4.4%9.4%8.1%-21.9%
Source: Lipper, Bloomberg