Given the turmoil in the markets during the last quarter, it is not surprising that the Sleepy Portfolio lost 1.8% during the quarter but has posted modest YTD gains of 2.5%. The results are not exactly comparable to the previous quarter because of the asset allocation changes implemented during the quarter. The Canadian dollar rose about 6% during the quarter decimating returns from US equities, which remained flat in U.S. dollar terms but most other markets have recovered sharply from the lows of mid-August.
![[Performance of the Sleepy Portfolio during 3Q 2007]](http://www.canadiancapitalist.com/images/2007/3q2007.jpg)
I’ve made more progress in cleaning up our portfolios and over 63% of our portfolio is now indexed and I’m inching closer to my 80% target.
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8 responses so far ↓
1 Joe // Oct 2, 2007 at 10:27 pm
ALthough slightly off topic (but related to XRB), how do you actually buy real return bonds? I can’t find them in the fixed income section at RBC Direct Investing…
2 WhereDoesAllMyMoneyGo.com // Oct 2, 2007 at 10:52 pm
Joe: I think the following link will address your question.
http://www.bylo.org/rrbs.html
3 mj // Oct 3, 2007 at 12:33 am
I was wondering if you could tell me your reasoning for buying XSB over individual short term bonds/GICs? I’ve recently switched over to an indexed portfolio with VTI/VEU/XIC but I’ve still got some GICs that aren’t due for a little while so I still have the decision ahead of me as to what to do with that money for my bond allocation. Right now the yield on XSB is 4.33, but you can easily get more than that on GIC right now with a little negotiating. You can get 4.25% at PC Financial in a savings account, for that matter. The MER on XSB is 0.25%, obviously low, but it does seem like a fair bit for holding fixed income, given that I pay the same 0.25% to Vanguard to hold 2200+ stocks in nearly 50 countries…
Is it for the automatic and convenient reinvestment? Does it react quicker to fluctuations in the interest rate so you don’t end up locked in for a long time with a sub-par rate?
4 Phil S // Oct 3, 2007 at 6:23 am
Joe,
Assuming that RBC is essentially like BMO, then you would have to call in to place the order. The last time I checked, the Government of Canada only issued three series’ of Real Return Bonds and they all mature roughly around the year 2025. Since the choices are very limited, brokers like RBC and BMO don’t bother to maintain an inventory of those bonds and you have to buy them off the open market.
5 Canadian Capitalist // Oct 3, 2007 at 9:29 am
mj: I’m actually working on a post on how to get fixed income exposure (funds/ETFs, bond ladders or GIC ladders). It is a tough question, but typically you get a bit more interest with a GIC (comparable GIC rate is 4.55%) by giving up liquidity. I went with XSB because I wanted the ability to sell and move to equities in case of a sharp correction.
Phil, Joe: I think GoC issues RRB’s every five years, maturing in 25 years. I read recently (I don’t have the source with me, so don’t quote me on this) that a new series was issued in 2006 maturing in 2041. Current real yield is around 2.2%.
6 Joe // Oct 3, 2007 at 11:58 am
Great, thanks for the answers on RRBs. That’ makes sense.
7 mj // Oct 3, 2007 at 1:09 pm
OK thanks. Looking forward to the post on fixed income!
8 Steve // Oct 8, 2007 at 11:40 am
You mentioned that you are targetting an 80% indexed portfolio. May I ask what the other 20% is comprised of?
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