Our most widely used investment portfolio program has been running for exactly 1 year as of this Thursday. While the portfolio approach has been employed by our firm for a number of years, last April we built a portfolio pool specifically for this strategy. The Willoughby Investment Pool shows a 9.9% rate of return for the year, primarily due to the tactical nature of the approach. The strategy screens some 20,000 securities at the beginning of every month to narrow down to a manageable few. The process screens securities based on 5 specific criteria including company market cap (size), a minimum profit margin, strong earnings, etc.
During the first quarter of this year, the pool also had strong results as it almost tripled the 1.7% return for the TSX. Positions from the technology sector led the way as they rebounded from a weaker 4th quarter. Continued strength was found in the Electronics and Semiconductor Sector with a 19.89% quarterly gain for Applied Materials (US), 21.55% for Celestica (Cdn) and 30.76% for Micron Technology, a US stock we picked up in December. We also saw a 16.19% return from TD’s Science and Technology mandate, and as we do with our individual securities, managed mandates are actively traded as soon as trading momentum shifts. (Source: SIA Charts Mar 31, 2017)
The tech sector was negatively impacted in the 4th quarter after the Trump win, which had also dragged down performance for the Willoughby portfolio at the end of last year. Great tech names with strong earnings like the ones listed above were hit hard for no apparent reason. Fundamentals prevail in the end and investors have been pouring back into these names since the beginning of this year, contributing to the pool’s healthy head start to the year.
Trump’s proposed economic policies for corporate tax reform, massive infrastructure spending and deregulation of businesses, should help generate higher growth and corporate earnings which should translate into higher equity values. We will continue to watch the situation and jump on opportunities as they present themselves.
Have a great weekend.
Daniel Popescu CFP, CIM, FMA, FCSI
President & CEO
MNP Tower, 3100-1021 West Hastings St.
Vancouver, BC V6E 0C3
T: 604-558-6830/1(877) 588-6822
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