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2Q-2008 Report Card

July 1st, 2008 ·

The Sleepy Portfolio continued to tread water in the second quarter of 2008 losing 1.08% through the quarter. The only winner was Canadian equities with XIC posting an 8% gain from the first quarter. Foreign equities had a poor quarter — US equities were down about 5%, EAFE markets were down 6.3% and emerging markets also fell 6%.

[Sleepy Portfolio Performance for 2Q 2008]

As our portfolios are mostly indexed, our performance was pretty much the same as the Sleepy Portfolio. Apart from the periodic investments in a Group RRSP, I spent the quarter in masterly inactivity, neither buying nor selling.

I’ll be rebalancing the Sleepy Portfolio in the near future as dividend income has pushed cash levels close to 8%. I’ll be selling a portion of XIC to bring the allocation to 20% and buying VTI and VEA to bring them both to the target allocation of 22.5%.

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10 responses so far ↓

  • 1 Terry // Jul 1, 2008 at 10:26 pm

    I recently reallocated my own RRSP funds, using a number of indexes for half the portfolio. I did not use the US equity index at all, however, because US performance has been so dismal over the last 10 years. That seemed like an awfully long time. I have a global fund that has about 30% of its investment in the U.S. and that is as far as I want to go right now, given the continuing talk of recession.

    Am I missing something I should see here?

    Terry

  • 2 Canadian Capitalist // Jul 2, 2008 at 10:04 am

    Terry: It’s true that US Equities have performed poorly over the last 10 years - the total return for the S&P 500 in C$ is 2.09% compared to 9.5% for the TSX Composite and 5.1% for the MSCI EAFE.

    But that isn’t the reason to give up because we don’t know which asset class will out perform or under perform in the next 10 years. And one thing is certain - we will be glad we held some asset classes and wish we hadn’t heard about some others. The trouble is it’s impossible to say which is which today. That’s why we diversify. If we know already which asset class would be a star performer, we would load up on it and forget about the others.

  • 3 Million Dollar Journey // Jul 2, 2008 at 10:46 am

    CC, you may have answered this before, but why did you choose XIC over XIU?

  • 4 Canadian Capitalist // Jul 2, 2008 at 11:34 am

    Either would be a good choice. XIU is cheaper and more liquid but XIC is tracks the broad index and more importantly the weight of a single stock is capped at 10%.

  • 5 Canadian Capitalist // Jul 2, 2008 at 11:58 am

    Actually, next week’s tour of ETFs will cover XIU/XIC followed by XSP and XIN in subsequent weeks.

  • 6 Pragmatic // Jul 2, 2008 at 3:24 pm

    I’m not sure you should be adding to your losing positions at this time. The Canadian markets continues to be poised to go up and the US markets are poised to go down. You’re selling your winners to chase losers.

    Although this strategy may *eventually* work, I think it’s still best to remain in Canada or other resource focused countries.

  • 7 Canadian Capitalist // Jul 2, 2008 at 11:02 pm

    Pragmatic: We’re talking about asset classes here, not stocks where you want to “cut your losses” and “ride your winners”. I firmly believe that you cannot time the markets, so it is best to stick to the original asset allocation plan and occasionally rebalance the portfolio. Even if I didn’t sell a little bit of XIC, there is still excess cash to be deployed and the logical place is the asset classes that are below the target set out initially.

  • 8 Rob // Jul 2, 2008 at 11:21 pm

    >> it is best to stick to the original asset allocation plan and occasionally rebalance the portfolio.

    Amen.

  • 9 Linking Sunday Weight Loss Success Edition | Personal Finance Blog by Money Ning // Jul 6, 2008 at 11:31 am

    [...] Always interested in other people’s portfolio so take a peek at Canadian Capitalist’s Q2 report card! [...]

  • 10 How many asset classes? // Sep 8, 2008 at 11:26 am

    [...] A strong equity bias means that the maximum number of asset classes should be far less than 20. The Sleepy Portfolio, for instance, has only eight asset classes — cash, short-term bonds, real-return bonds, [...]

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