Q: I hold TD in my portfolio. I've read a couple articles recently highlighting that RY has performed much better than TD in recent years, pointing to RY's higher ROI investments (i.e. focusing on Canadian operations and US Wealth Management) relative to TD (i.e. focusing on US Retail banking, and their recent failed acquisition).
What are your general views on this comparison from an investing perspective and would you replace TD for another Canadian bank such as RY? Which of the Canadian banks would you select as a long-term "set it and forget it" investment based on sound management and, of course, expected stock returns.
What are your general views on this comparison from an investing perspective and would you replace TD for another Canadian bank such as RY? Which of the Canadian banks would you select as a long-term "set it and forget it" investment based on sound management and, of course, expected stock returns.
5i Research Answer:
RY has been very well managed over the years and has done a good juob in US markets (as has TD). The failed acquisition has likely caused a bit of a hangover for TD shares but the outcome is probably for the better at least in the medium term given the issues that popped up in the regional space last year. TD has typically outperformed within the Canadian banks, so we would be reluctant to make a change here based on the last year. With that said, we would view RY and TD as similar in exposures and have higher correlations, so do not think a switch would be particularly impactful or concerning either way.