I have recently been asked the following questions.
Q: I am under the impression that the leading market indices are doing well, but my investments are not!
Q: I have a hard time understanding what exactly is happening? The US economy is growing and the Canadian economy doing better than expected which forced the bank of Canada to raise the bank rate twice over the summer!
Q: What’s happening? The stock market in general is up but my investments portfolio is not. Does this mean we are holding the wrong investments?

The Canadian Dollar!

Not the case. Your funds are doing well. They are being affected by the currency.
What and How?

The currency exchange rate is having a huge impact on your investments.

Funds are holding a diversified number of stocks and bonds in foreign currencies. Nonetheless, your funds are being priced in Canadian dollars and not US dollars.

The currency facts:
-Beginning of summer: $1.00 USD $1.37 CAD
$0.73 USD $1.00 CAD
-Now September:        $ 1.00 USD $1.20 CAD
$0.83 USD $1.00 CAD

As of today, this represents a savings of 12.41%. Now relate this to US equities that you have purchased in the past when the exchange rate was less favourable. In other words, this represents a negative impact on your investments. By eliminating this negative impact of a falling currency, your funds would have been positive.

Year to date returns on world stock markets as of September 8th: 

                        USD $        CAD$
S&P 500         +11.50%      +0.82%
Dow Jones      +12.00%     +1.50%
NASDQ           +19.00%     +7.7%
MSCI               +11.80%     +1.15%

Example: A difference of 9% return in the last 3 months on CI Black Creek Global Balance fund: USD$ +3.23% CAD$ -5.67%

Currency is very volatile for several reasons such as interest rates, demand and economic growth and geo-political reasons. It moves daily. In the long run it will all play out evenly.

If you have any further questions do not hesitate to contact me at 514-376-7771 or by email at [email protected].