In this column published every two weeks, we give you concrete ideas for investing your money.
The plummeting Canadian dollar discourages us all, but as an investor, this disconcerting reality has probably given your portfolio a boost in 2024.
• Also read: The smart investor: which companies will you bet on in 2025?
• Also read: In the eye of Quebec inc.: a profitable year for this CEO
The loonie has lost more than 7% of its value in recent months. If you have traveled to the United States, you have definitely felt the effect.
But as there is often a silver lining to everything, the weakness of the Canadian dollar has allowed many Canadian investors to obtain a better return than Americans!
The flagship US index, the S&P 500, ended the year with a return of 23.3% (25% including dividends). For the first time since the late 1990s, the S&P 500 gained more than 20% two years in a row.
Yield of 36%
Canadian exchange-traded funds (ETFs) that track the S&P 500 produced a total return of 36% (dividends included)! For us, the sharp rise in the American stock markets was magnified tenfold by the apathy of our currency.
Of course, few Quebec investors only invest in the United States. But most balanced portfolios have relatively significant exposure to what remains, by far, the world’s largest stock market.
Consider the iShares XBAL Balanced ETF, which is 60% stocks and 40% bonds. Just over 36% of its assets are invested in the United States, 44% in Canada and the rest in other countries. In 2024, XBAL recorded an exceptional return of over 16%, a high since at least 2014.
Not surprisingly, iShares’ all-stock ETF, XEQT, which contains 47% U.S. stocks, generated an even more impressive return last year: almost 25%.
Gold shines
The same logic benefited those who invested in gold. The value of the yellow metal jumped around 26% in 2024, its best year since 2010. In Canadian dollars, the increase was more than 37%!
The performance of the S&P/TSX was more modest, but with an increase of 18.5%, the main index of the Toronto Stock Exchange had its best year since 2021, when it climbed almost 22%.
Bitcoin once again beat most asset classes with a return of around 120% in 2024, the second year the cryptocurrency gained more than 100%.
Dull bonds
Only Canadian bonds experienced a lackluster performance. The iShares XBB ETF, made up of nearly 1,700 securities issued by governments, municipalities and well-established companies in Canada, had a return of just 4.1%, compared to 6.6% in 2023.
What to expect this year? Most forecasters are counting on more “normal” stock market returns in 2025. I remind you, however, that they said pretty much the same thing a year ago.
If you are investing for the long term, regularly investing money in diversified funds is a strategy that many experts recommend.
