What to expect in 2015

Expect the unexpected:

Most analysts, economists and portfolio managers will make projections for 2015, but a great deal of them will be wrong. It is why most portfolio managers are unable to even match their benchmark indices ( the going rate by which portfolio managers beat their benchmarks is somewhere around 20%) 

• To start 2014, the "smartest in the room" were calling for the 10 year US bond yield to get to 3.5 or 4.0%.
• Where did they end up?
• 2.2%
• Bond holders were big winners, not big losers as was widely expected.
• for 2014, a Canadian government bond ETF had an approximate total return of 8.5%
• In my 60/40 model the 40% Fixed Income component had a total return of a little over 8.5% (including my preferred share mix that had approximately 10% total (pre-tax) return.
• The Canadian equity allocation returned approx. 5.8%
• US equity allocation returned approx. 11.2%
• International equity allocation returned 3.2%
• The total model returned approx. 7.75% (right on the long-term target average return of 7-8% and nicely ahead of the benchmark 60% World Equity index and 40% Canadian bond index of approx 4.5%) 

I always preach (to those who will listen), balance and diversification, over time, will give you the best possible return while minimizing the risk needed to get that return.

We do not know what 2015 will bring, but expect volatility in financial markets. to counter that volatility, balance and diversity will be your friend.

Happy 2015.