Quarterly Commentary

Annual Review - December 31, 2017

Here is a recap of the most recent stock market performance:


Year Canada US Europe Emerging Markets World
2017 9.22% 21.90% 13.72% 31.00% 19.13%
2017 Q4 4.65% 6.55% 1.32% 5.74% 5.42%
2017 Q3 4.10% 4.46% 3.49% 7.72% 4.06%
2017 Q2 -1.82% 3.10% 2.14% 6.68% 2.86%
2017 Q1 1.19% 6.23% 6.18% 7.80% 5.58%
2016 21.15% 11.61% 7.90% 10.11% 9.65%
2015 -8.36% 1.32% 5.45% -5.40% 2.65%
2014 11.43% 13.36% 5.22% 5.57% 10.40%
2013 13.58% 32.61% 22.26% 3.79% 29.57%

Source: MSCI gross returns including dividends, all returns in local currency.


The stock markets around the world were positive for 2017. The Canadian market was one of the worst performers at only 9.22% and one of the best performers was the emerging markets sector at 31.00%.


The Canadian dollar was up 6.95% (against the US dollar) finishing the year at $0.80.  Good for international travel, not as good for your portfolio.  For example, the S&P made 21.6% for the year (in US dollars) but in your portfolio, it made only 13.3% when accounting for the increase in the value of the CDN dollar.


The CDN dollar went up against most currencies in the world in 2017. The CDN dollar was up 6.8% against the Euro and 14.1% against the British Pound.


The price of oil increased by 6.5% - it started the year at $53.72 per barrel and ended the year at $60.42.


Gold increased from $1,152.27 per ounce to $1,303.05 an increase of 13.1%.


The stock markets and commodities market did extremely well in 2017.


What does this mean to you?


I like the great performance as much as anyone but we are getting to the late stages of this stock market cycle.  We don’t know when it will end but we must prepare for any future downward stock prices. Stock market valuation is a useful tool as it allows you to gauge if the stock market is overvalued or undervalued at a moment of time.  What it is bad at is allowing you to determine if the market is going up or down in the near future. Stock markets can be undervalued or overvalued for long periods of time.  However, the more the stock market is overvalued, the more cautious we become.


  1. If you’re generating an income, or are within five years of retirement, we want to ensure that you have at least three years of income in fixed-income investments. This will provide income protection so you do not need to touch any investments that might be down in value when generating your desired income during the inevitable future stock market correction.
  2. We continue to hold the neutral equity mandate. This means we’re not overweighting nor underweighting equity. The amount of equity in your portfolio is based strictly on your long-term risk tolerance and objectives (see above).
  3. We continue to believe in diversification and hold a significant portion of your equity mandate outside of Canada. This strategy has reduced volatility and increased your return this year.


New Year – New Name – RGF Integrated Wealth Management


We have been helping our clients manage much more than their investments since 1973. Managing clients wealth is much more than using risk tolerance (how much the ups and down of the stock market bother you) and vague objectives such as “capital preservation” or “growth”.


In reality, clients have objectives like retiring early, helping children pay for school, helping their elderly parents or having a plan in place to deal with a change in health status.  It is not about some basic investment strategy.


We all know that financial resources are limited and you need to focus those resources on the most effective wealth management strategy that allows you to meet your personal and unique objectives.


Once you’ve spent the time to articulate what you and your family are trying to achieve, then you can organize your financial affairs to give the highest probable chance of reaching those objectives.


There many issues and concerns that you need to develop in deciding your wealth management strategy:


  1. Should you direct your savings into an RRSP or TFSA?
  2. Is it better to pay off your debt (mortgage) or invest with surplus income?
  3. How much do you need to save to retire comfortably?
  4. Once retired, how best to structure your income so you outlast your savings?
  5. Is your family taken care of if you become disabled or have other unexpected health issues?
  6. Have you done the proper estate planning for your family?
  7. As a business owner, have you decided how to design a proper succession plan so that both you and your business can still prosper?
  8. Should you defer your CPP?
  9. What pension option should you choose?


It is only after we have truly figured out what you’re trying to achieve, can we start to answer any of these questions. 


Once implemented, it is important to benchmark your investment strategy against the relevant benchmark.  A relevant benchmark should measure the results you need to meet your financial objectives.  In our case, we use the assumptions that we built into the preparation of your financial plan as the benchmark.  We always want you to know whether you’re on target or not.


There is a cost involved with any strategy with any institution.  If you’re doing most of the work and assessing your own situation while your adviser is just filling the order, then the cost and compensation should be much lower. In this case, you should consider a robo-adviser or a self-directed account where you can direct the decisions. The dealer compensation in this model should only be 0.25 per cent to 0.50 per cent. There is no need to pay for advice you’re not getting or do not need. If you buy a mutual fund at your local bank branch because you really don’t want the advice, you are probably paying just as much as if you bought the mutual fund through a full-service adviser.


The difference between wealth management and money management is making sure that your affairs are structured and you are meeting your objectives.  This takes time and constant monitoring as your objectives can and will change as you move through the various stages of life. 


In our opinion, it is very difficult or almost impossible to design an investment strategy without doing the proper financial planning before you invest.    In addition, in meeting your objectives, there are many decisions that must be made that have nothing to do with investing.


We strongly believe that personal contact with a qualified advisor is essential in helping you plan your financial future. 


The success and failure of any strategy is not the initial plan developed but more important is the ongoing monitoring and adjusting that will be required to keep you on course to meet your personal objectives.  If you plan on overall integrated wealth management strategy, you should be up to absorb and adjust as life changes.


Clay Gillespie
Financial Advisor, Portfolio Manager, Managing Director
604 732 6551


Planning Team


John Hale, CPA CGA CFP


Carly O'Connell, BA

Lorraine Watson

Carol Scalise


RGF Integrated Wealth Management Ltd. | RGF Wealth Management Ltd.


Clay Gillespie is a Financial Advisor with RGF Integrated Wealth Management Ltd. The views expressed are those of the author and not necessarily those of RGF Integrated Wealth Management Ltd, which makes no representations as to their completeness or accuracy.


© Jan 2018 RGF Integrated Wealth Management Ltd. RGF Wealth Management Ltd., Member - Canadian Investor Protection Fund