Opinions
Terry Shaunessy
Horizons S&P/TSX 60 Equal Weight ETF
HEW-T
PAST TOP PICK
Sep 23, 2015
Stock price when the opinion was issued
You might be interested:
One of the reasons he likes equally weighted indexes is that over the next 18 months he feels the breadth of the market will widen. That means more stocks will start to participate. If you get a broader market, an index that is composed of equal weighted constituents, tends to do much better than the market capitalization. Each one of these things is 1/60th of the portfolio. This reduces the exposure to banks and picks up the energy and materials side and some of the more cyclicals.
He likes this because an equal weighted index, unlike a market cap index, is that each portion in this is worth 1/60 which deemphasizes financials and tends to emphasizes cyclicals. He sees a cycle coming and feels this will do better than the market weighted ETF. Banks are 40% of the index in Canada and he sees them going sideways.
This is one that he bought and sold poorly. He owned the S&P 500 Equal Weight in the US, and tends to like equally weighted big indexes because they tend to perform benchmarks. The TSX 60 is not a great index. It is dominated by some big companies, but you have a lot of junk in there too. When you equally weight these things, it would be better if this were 40 or 50 stocks rather than 60, because it would get rid of all the junk at the bottom. You are far better to just buy the 3 sectors, energy, financials and materials, and balance them whatever way you want.
(A Top Pick July 22/14. Down 16.9%) This was less with banks and more with energy and resources. In the summer of 2014 he thought we would have a more typical recovery.