Since its inception, the Portfolio is up 61.5 through the end of the third quarter of 2009. Over the same period, the MSCI World Index is down 1.6 percent and the S&P 500 is down 11 percent. I’m also adding a new holding that should contribute to the Portfolio’s history of outperformance.
The US is no longer the only market for Canadian exports, the only source of new products or the sole font of new investment. Rather, its share of all three has been steadily shrinking due to even faster growth in Canada’s trade and investment with other nations.
At current levels, energy, telecommunications, financial, industrial, and material companies appear to be the cheapest in Asia.
China is the largest footwear manufacturer in the world, accounting for more than 60 percent of global production. At the same time, it also has the biggest footwear market, with estimated sales of more than 2.4 billion pairs–13 percent of the global footwear sales.
The rally in emerging market equities has been broad based, though the Chinese market has led the way. But next year country and stock selection will become increasingly important to the asset allocation process. Expect “sustainable growth” to become next year’s buzz phrase.
The recently announced “agreement” between the Libyan Investment Authority (LIA) and Verenex Energy (TSX: VNX, OTC: VRNXF) is bound to attract significant attention: LIA, a sovereign wealth fund (SWF), has become the instrument by which its sponsoring state authority has impeded market processes and damaged shareholders.
Consumer staples perform well during economic recoveries. And there’s a growth kicker: soaring sales in emerging markets.
I continue to recommend that investors focus on quality and overweight key cyclical industries. Technology resources, energy and some infrastructure (e.g., ports) remain relatively undervalued in many emerging markets, while valuations in Russia and some other high beta markets remain below previous highs.
Since the earlier part of the decade, global emerging markets–led by Asia–have been at the forefront of global economic growth. I expect that trend to continue as they leverage their financial strength to support structural changes in their domestic economies.
This longtime Growth Portfolio holding operates in three diverse business segments. This diversification provided cushion against the economic downturn as second quarter earnings easily topped expectations.
