Market week: Indexes lose ground on week and month

Market week: Indexes lose ground on week and month

Fed’s Powell admits rising inflation to linger longer


With U.S. payrolls for November at a less-than-expected 210,000 and Covid and its variants still very much in command of the 24/7 news cycle, the main North American stock indexes lost ground on the week. U.S. Federal Reserve Chair Jerome Powell added to the general dismay with his testimony to congress, admitting that he expects rising inflation rates to linger into next year, while improving conditions in the labour market are removing slack resulting in wages rising at a brisk pace. The upshot of that, said Powell, is to wrap up the Fed’s tapering program sooner. With that comes the risk of interest rate hikes earlier than previously expected.

In Canada, the labor market added 154,000 new jobs in November, while unemployment fell to 6%. That, too, had analysts speculating on the timing of the Bank of Canada’s next moves for interest rates, as it has already cut its tapering program.

The S&P/TSX Composite Index lost 2.3% on the week with steep losses in healthcare and information technology, and posted a 2.6% loss in November. Crude oil dropped 2.9% on the week, and lost 21.2% on the month. Gold fell 0.5% on the week for a 1.0% retreat on the month. The S&P 500 Composite Index lost 1.2% on the week on weakness in banks and telecom services, and dipped 0.5% for November. The Nasdaq Composite Index retreated 2.6% on the week, and lost 3.0% in November overall.

Fund news

* TD launches two new equity income pools. TD Asset Management on Dec. 3 debuted two new funds-of-funds: TD Global Equity Income Balanced Pool and TD Global Equity Income Pool.

The funds will invest primarily in mutual funds and ETFs managed by TDAM. Investments may include preferred and common shares, real estate investment trusts and other similar income-producing instruments. The objective is regular monthly distributions that may include a return of capital. The TD Global Equity Income Balanced Pool adds a global fixed income component to form a 75/25 equity to fixed income target mix.

* TD launches three new ETFs. TD Asset Management (TDAM) on Nov. 30 debuted its TD Morningstar ESG Canada Corporate Bond Index ETF (TSX: TMCC) and TD Morningstar ESG U.S. Corporate Bond Index ETF (TSX: TMUC), which aim to track corporate bond indexes that measure the investment return of fixed income securities from issuers that exhibit higher ESG ratings relative to their peers.

TDAM also introduced its TD Global Technology Innovators Index ETF (TSX: TECI), which track the performance of a technology innovators index measuring the investment return of technology companies that are deemed to be innovators based on higher annual growth rates in revenue, return on invested capital, and operating margin expansion relative to their peers, while eliminating mega-cap technology stocks that may represent a large component of a particular index.

* Horizons debuts two new thematic Global X ETFs. Horizons ETFs Management on Dec. 2 launched Horizons GX Cybersecurity Index ETF (TSX: HBUG) and Horizons GX Telemedicine and Digital Health Index ETF (TSX: HDOC). The funds will invest in popular U.S.-listed ETFs offered by Horizons’ U.S. sister company, Global X ETFs. Horizons ETFs and Global X ETFs are both subsidiaries of Mirae Asset Global Investments Co. Ltd.

U.S.-based Global X Management has more than US$42 billion in assets under management, primarily focused on thematic ETFs.

HBUG and HDOC are ETFs of ETFs and will seek to replicate their respective indexes by investing in the underlying U.S.-listed ETFs as well as optimizing exposure for Canadian investors by adding a currency hedge.

HBUG seeks to replicate, directly or indirectly, the performance of Indxx Cybersecurity Index, net of expenses, by investing primarily in the Global X Cybersecurity ETF (NSD: BUG). The index provides exposure to global, publicly listed companies that may potentially benefit from the increased adoption of cybersecurity technology.

HDOC tracks the Solactive Telemedicine & Digital Health Index by investing primarily in the Global X Telemedicine & Digital Health ETF (NSD: EDOC). The index provide exposures to global, publicly listed companies in the field of telemedicine and digital health. HDOC seeks to hedge any U.S. dollar portfolio exposure back to the Canadian dollar at all times.

* Fidelity launches Bitcoin funds. Fidelity Investments Canada on Dec. 2 debuted its Fidelity Advantage Bitcoin ETF (TSX: FBTC) and Fidelity Advantage Bitcoin ETF Fund. The ETF invests in Bitcoin, while the mutual fund invests in the ETF. When an investor purchases the ETF, they will own units of the ETF, which in turn owns physical bitcoin. The price of units will go up and down directly in relation to the price of Bitcoin. The Bitcoin that the ETF owns is stored using an institutional-grade custodial model, offering the ETF access to the trading and custody of digital assets in a secure way.

* BMO launches ETF version of money market fund. BMO Investments Inc. on Dec. 1 launched BMO Money Market Fund – ETF Series (TSX: ZMMK), the ETF Series units of its BMO Money Market Fund with the objective of capital preservation by investing in a portfolio of high-quality money market instruments issued by governments and corporations in Canada. The portfolio manager selects high-quality money market instruments that mature in less than 365 days and have an average term of 90 days or less to reset date and 180 days to maturity date.

* Purpose debuts three new crypto ETFs. Purpose Investments on Nov. 30 launched covered call cryptocurrency ETFs Purpose Bitcoin Yield ETF (TSX: BTC.B) and Purpose Ether Yield ETF (TSX: ETHY.B). The funds aim for monthly distributions and capital appreciation by holding Bitcoin and Ether respectively and by implementing a derivatives-based strategy in respect of portfolio securities. The ETFs are also available in U.S.-dollar-denominated non-currency hedged units.

Purpose also launched its actively managed Purpose Crypto Opportunities ETF (TSX: CRYP),which aims for long-term capital appreciation by investing primarily in digital assets and securities that provide exposure to digital assets.

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