Investing.com - Financial Markets Worldwide

U.S. Equities: Will Outperformance Last?

ByThe National Bank of Canada
Published 05/13/2012, 07:21 AM
Updated 05/14/2017, 06:45 AM

Over the past few months the performance between the S&P 500 index and the S&P/TSX composite index has diverged significantly. In March 2012 the relative performance between the two indices reached 20%, the largest return difference since 1998. At the current time the 6-month total return for the S&P 500 is 9.5% while the TSX index
contracted 3.0%, a difference of 12.5 percentage points.

Today’s Hot Chart takes a look at whether investors should expect this trend to continue or revert? Over the last 15-years we have observed a handful of episodes where the U.S. market has recorded a significantly stronger 6-month performance relative to the Canadian index and in all episodes the spread narrowed significantly after peaking. In addition once the relative return peaked, the returns over the next 6-months were either similar or the performance trend reversed. History suggests that the current trend in performance between U.S. and Canadian indices is unlikely to continue and may warrant a review of equity allocations in a North American equity portfolio.
U.S. Equities Will Outperformance Last

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