What if I told you that as of June 28, 2017, essentially half way through the calendar year, only one sector out of ten (including REITs with Financials) was negative?
What if I told you that out of those ten sectors, six of them had returned over 5% in the year-to-date period and three of those had returned in excess of 10% over the year-to-date period?
With the TSX flat to slightly negative over the same period, you would likely call shenanigans, but it’s true.
Only one sector is negative for the TSX in 2017 and due to its heavy weighting, it has been the main contributor to the lack of any returns on the TSX so far this year.
Source: Thomson Reuters Eikon
To be fair, the fact that the next two largest industries in Canada were flat for the first half of 2017 did not help either, but herein lay the problem. The TSX is a bad benchmark to use because it is too heavily weighted to a few sectors and makes it difficult for passive investors in Canada.
What’s more, being a ‘passive’ investor in the TSX could actually be an oxymoron, as an individual is really making an active tilt toward the financial and energy sectors. As can be seen in the table below, if an investor takes a passive approach to the TSX, they are putting 55% of their allocation in two sectors and 66% in three sectors.
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