Annual performance for my secular trends fantasy portfolio is now posted

I’ve posted the annual performance review for my secular trends fantasy portfolio which consists of nine ETFs representing thematic investment opportunities.

2018 was not kind to the portfolio (down around 10%) but cyber-security was a particular bright spot, up about 7%. More here.

My latest article on secular trends and investing has been published in Canadian MoneySaver

Canadian MoneySaver published my latest article on thematic investing in the July/August 2018 edition.

This time I discuss the investment opportunities in alternative energy. While there are headwinds in the short to medium term, long term this theme offers considerable potential, especially in Asian markets.

See more here (paywall): Canadian MoneySaver

Second quarter secular trends fantasy portfolio results are now posted

With the second quarter completed, I’ve updated my secular trends fantasy portfolio performance report.

It’s been a strong year so far for the overall performance, but some themes are doing much better than others.

The total portfolio has delivered a 5.89% total return so far this year. The leaders are Amplify Online Retail ETF (IBUY), up ~25% and ETFMG Prime Cyber Security ETF (HACK), up ~17%.

The laggards are Vanguard FTSE Emerging Markets ETF (VWO), down ~7% and iShares Global Clean Energy ETF (ICLN), down ~5%.

By contrast, my secular trends benchmark is up only ~1% year to date. Other major indexes have total returns year to date as follows:

  • NASDAQ (QQQ) +10.6%
  • S&P 500 (SPY) +2.52%
  • TSX Composite (XIC) +1.14%
  • Dow Jones Industrial Average (DIA) -0.91

So, secular investing this year so far has done fairly well even though performance varies widely by theme. See the full performance report here.


Secular trends fantasy portfolio launch

I’ve launched a new fantasy portfolio on the website to track secular, or thematic trends for investors.

A secular trend is:

An investment trend associated with some characteristic or phenomenon that is not cyclical or seasonal but exists over a relatively long period.

The rationale for doing this and the initial portfolio structure is presented here.

The first secular trends fantasy portfolio tracking report (and its benchmark) is presented here.

I’ve also added a new menu option called “Secular trends and investing” on the site for quick access.

The eCommerce secular trend made news today

WalMart, the once-stodgy bricks and mortar retailer, made news today with its largest acquisition ever – $15B US for 75% of eCommerce retailer Flipkart in India.

It reportedly beat out Amazon for the deal.

WalMart shares dropped 3% on the news.

Amazon’s shares rose 1%.

Softbank appears to have done very well. Other players were involved including Alphabet, Microsoft, Tencent Holdings and Naspers.

The deal hasn’t fully closed yet….

More from Bloomberg here.


Another new ETF to play the robotics and AI secular trend

I wrote an article about robotics/artifical intelligence for Canadian MoneySaver published last November. In that article I mentioned two ETFs: Robo Global Robotics & Automation ETF (ROBO) – which I own – and Global X Robotics & Artificial Intelligence ETF (BOTZ). Both trade on the NASDAQ and each has just under $2.5B US in assets under management. ROBO has a 0.95% management fee and is based on the ROBO Gbl Robotic & Automat TR USD index. BOTZ has a 0.69% management fee and is based on the INDXX Global Robotics & AI Thematic TR USD index.

Since writing the article, a Canadian version of ROBO was introduced on the TSX by Horizons called Horizons Robotics and Automation ETF (ROBO.TO). It is still small with only $51M CDN in assets under management and has a management fee of 0.75%. As it approaches $100M in assets under management, this hedged fund could be of interest to Canadian investors wishing to invest in this theme in Canadian dollars.

But the latest addition was announced on February 22 of this year. It is called First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT), has just $3M US in assets under management and a fee of 0.65%.

According to

The fund tracks an index developed by the Nasdaq and the Consumer Technology Association, the Nasdaq CTA Artificial Intelligence and Robotics Index. The benchmark’s methodology selects stocks at the global level that meet [sic] have sufficient liquidity, at least $250 million in market capitalization and free float of at least 20%. 

While it is not yet a week old, ROBT is one to watch for those wishing to invest in this secular trend. Given the growth in assets under management (ROBO and BOTZ in the last three months combined have seen inflows of $1.7B US) and the growth in the number of funds, there seems to be considerable investor interest in this secular trend.

(If you didn’t see it already, Ottawa Share Club member Jan also wrote about disruptive technologies that include AI and robotics. More here.)

Note: these are not endorsements or promotions – conduct your own due diligence and see our disclaimer.

Jan’s research on ETFs for robotics, artificial intelligence and other disruptive technologies

After the last Share Club meeting featuring the topic of driverless cars, Jan, a Share Club Exec, has kindly provided his research into ETFs following robotics and artificial intelligence and other disruptive technologies.

His material is posted here on his Ottawa Share Club member page.

Don’t forget, much more OSC member and guest content is available here.


Six ways to invest in technological secular trends

I am a bit of a advocate for investing in secular, or long-term, market trends as a portion of a balanced portfolio. As many of you know I’ve written about e-commerce and water for Canadian Moneysaver, and have submitted an article on robotics for hopefully September publication.

I read an article today about six ways to invest in technology-driven trends (some of which may be secular). The six ETFs mentioned in the article are all American (not surprisingly given the size of the US economy and the amount of innovation taking place there). Here they are:

  • Robo Global Robotics ETF – ROBO (one of the topics in my upcoming article)
  • Emerging Markets E-Commerce ETF – EMQQ (mentioned here on recently)
  • Pure Funds Mobile Payments ETF – IPAY
  • Powershares Nasdaq Internet Portfolio – PNQI (mentioned in my e-commerce article now available for free)
  • Pure Funds Cyber Security ETF – HACK
  • SPDR Biotech ETF – XBI

One thing I learned about XBI is that it is equal weight with its holdings as opposed to IBB which is much more concentrated on certain companies (I own IBB, and this gives me pause to consider switching to XBI).

The full article is here.

Disclosure: I/we own shares in ROBO and IBB.


My article on investing in the E-commerce secular trend – now available for free

With permission from Canadian MoneySaver, I am happy to provide a free copy of my article on E-commerce that was published in February 2017.

The article explores the growth trend in E-commerce and some investment opportunities and risks.

Here is my article: E-Commerce_Patenaude

Since writing it, another ETF has come to my attention that might be worth further research by investors (note this is not an endorsement of any kind): Emerging Markets Internet & Ecommerce ETF (EMQQ).

According to YCharts, the fund is up 44% year-to-date and has $104M US in assets under management, an average of 128,000 shares trading per month (a bit small), and an expense ratio of 0.86% (a bit high). There is an article about EMQQ here.

(Note that I also wrote an article on the water/water scarcity secular theme that was published in Canadian MoneySaver in June 2017. My next article will be on robotics and automation, hopefully published in the August or September timeframe.)

How I can add the ROBO ETF to our portfolio

I figured out how to finance a purchase into the robotics secular trend in our portfolio.

I have been interested in the robotics secular trend for some time. Our portfolio does not currently own any shares that follow this theme. I have found an ETF I like trading on the NASDAQ called Robo Global™ Robotics & Automation ETF (ROBO).

My challenge is we are slightly overweight in equities compared to our asset allocation plan. So I don’t want to simply buy ROBO and further extend our equity allocation. Instead, I need to sell an existing holding(s) to finance the ROBO investment. To add to the challenge, I want to take a “large” position in this theme since I like it a lot. By buying an ETF I can spread the risk compared to a single security and therefore would be inclined to go overweight.

I have been thinking about selling Cineplex (CGX) and Enghouse Systems (ENGH). They are both low conviction holdings right now. But they are both performing OK in our portfolio (CGX has contributed 32% plus dividends and ENGH has contributed 52% plus dividends in the last three years).

It occurred to me that maybe what I should do is sell our holding in NYSE–listed SPDR® Dow Jones Global Real Estate ETF (RWO). This offers a few advantages: it is already in US dollars so no conversion costs will be incurred; it is a “large” holding (about 4% of our equities); it has performed weakly so there are no capital gains taxes; it would reduce our US exposure and increase our international exposure by 2/3 of a position (something I’m happy to do right now given relative valuations of US vs ex-US markets); and we already have considerable personal exposure to real estate with our own household properties (so there is not a big need for more real estate exposure in our asset mix).

I can then let CGX and ENGH hang tight for a while to see if my conviction towards them improves while making the switch to ROBO – all without adding new money to equities. Sounds to me like a plan to implement on my next quarterly trading day on June 15.

Some investment trends I am following

As a long-term investor, I am always on the lookout for emerging trends and ideas that could represent solid opportunities.

The main ones on my radar right now are:

  • e-commerce: while not a new trend, it seems to continue growing at a fast clip and represents some good, if sometimes high risk opportunities
  • water scarcity: this trend is not that new either, but it seems to not be going away anytime soon, making for opportunities to invest in companies that have, for instance, products or services in the extraction, transportation, purification or disposal of water
  • robotics: like it or not, robots are increasing in usage in many industries, and in particular in manufacturing making the companies that produce and service robots of considerable investment interest
  • alternative energy: with a possible resurgence in carbon-based energy exploration and development in the US under the new government, and with apparent oversupply of oil and gas on markets, alternative energy has been in a short-term slump, which longer term, given climate change accords, will quite possibly reverse
  • disruptive technologies: more generally, there are disruptive technologies emerging in many sectors and following them can be challenging but potentially rewarding – whether in health care, technology, manufacturing, analytics or internet of things, opportunities are presenting themselves on a regular basis

Trying to select investments in these sometimes risky areas of endeavour can be tricky, so I tend to prefer a diversified approach to thematic or secular investing via ETFs.

To get a sense of some of the ways to invest in these trends, visit It’s My Portfolio dot-ca’s Investment Resources for Canadians and see the entries for investment theme/secular trend.