Better Off With Bonds Than Stocks: A Decade in Canadian Markets
Edit:How badly have Canadian stocks underperformed this decade? Here’s the sobering answer: An investor would have done just as well avoiding all the risk and volatility of equities and buying an index of plain vanilla, guaranteed government bonds.
A mix of Canadian federal, municipal and provincial government debt returned 94% in the decade following the great financial crisis, as central banks around the world primed the economic pump with lower interest rates. That led to outsized gains for government debt, whose prices rise as rates fall.
The return for Canada’s main equity gauge was remarkably similar, gaining 95% since the end of 2009. That’s less than half the 255% return for the S&P 500 index in the U.S., as Canadian stocks were weighed down by mining and energy companies like EnCana Corp.