Sleepy Portfolio

Sleepy 1Q-2005

April 1, 2005

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The Sleepy Portfolio had a really sleepy quarter, advancing just 0.7%. Income of $440.28 or 0.4% from dividends and interest accounted for bulk of the gains. The TSX on the other hand posted an impressive 3.96% gain paced by the strength in the energy and mining sectors. The S&P 500 lost -2.59% during the quarter.

My personal portfolio (I am still working towards getting an asset allocation similar to that of the Sleepy portfolio) posted a 3.5% gain. I did two transactions in my accounts: I sold half my investment in Canadian Natural Resources (TSX: CNQ) and bought Anheuser Busch (BUD) with the proceeds.

I currently don’t own any bonds or any REITs. I think they are overvalued and a good buying opportunity will present itself sometime in the future. However, I do plan to slowly work my way towards my target asset allocation.

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The Sleepy Portfolio Summary

March 25, 2005

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REITs have been among the best-performing asset classes over the past 5 years and odds are they are going to under perform other asset classes in the future. Still, I am going to invest the other portion of the Sleepy Portfolio in the iUnits TSX Capped REIT Fund (TSX: XRE). The expense ratio for the iREIT fund is a bit on the higher side at 0.55% and yields about 5.9%.

Jan 4, 2005: Buy TSX: XRE 400@$11.60 + commission $29.95 = $4669.95

The Sleepy Portfolio is an asset-allocation driven, fairly low-cost portfolio with even the most expensive fund has a MER of only 0.75%. In investing about $100,000, we have spent about $300 in commissions (about 0.3%). To keep things simple, the portfolio has only 10 funds in it. It can be tweaked further by:

  1. The equity portion of the portfolio has a low dividend yield. It might make sense to allocate some of the US large-cap portion to high-yield ETFs like the iShares Dow Jones Select Dividend (DVY).
  2. The portfolio can be given a value tilt by splitting the US equity portions into two and investing half in the value version of the respective indices.
  3. Probably the best option for the bond portion of the portfolio is laddering the bond maturities and also considering investing in Real Return Bonds.

The Sleepy Portfolio Building Blocks III

March 24, 2005

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For the equity portion of the Sleepy Portfolio, we will stick to the iShares and iUnits ETFs offered by Barclays Global Investors.

The Canadian portion of the equity allocation can be split between two ETFs: the iUnits i60C (TSX: XIC) and the iUnits iMidCap (TSX: XMD). The expense ratios for these funds are 0.17% and 0.55% respectively.

There is a lot of choice available for the US equity portion of the portfolio. To keep things simple, we can divide the money equally between large, mid and small cap indices: iUnits S&P 500 (TSX: XSP), iShares Russell Midcap (IWR) and iShares Russell 2000 (IWM).

The MSCI EAFE Index tracks developed markets in Europe, Australia and the Far East and has a 45% weighting in Japan and the UK. The iUnits version is called iIntR (TSX: XIN) and has a MER of 0.50%.

The MSCI Emerging Markets Index tracks the performance of countries like South Korea, South Africa and Taiwan. The iShares MSCI Emerging Markets Index Fund (EEM) has an expense ratio of 0.75%.

Jan 4, 2005: Buy TSX: XIC 200@$56.55 + $29.95 commission = $11,339.95
Jan 4, 2005: Buy TSX: XMD 170@$65.00 + $29.95 commission = $11,079.95
Jan 4, 2005: Buy TSX: XSP 500@$15.30 + $29.95 commission = $7,679.95
Jan 4, 2005: Buy IWR 75@US$78 + US$29.95 commission = $7,204.11
Jan 4, 2005: Buy IWM 50@US$126 + US$29.95 commission = $7,755.45
Jan 4, 2005: Buy TSX: XIN 700@$21.40 + $29.95 commission = $15,009.95
Jan 4, 2005: Buy EEM 40@US$198.00 + US$29.95 commission = $9,740.28

Tomorrow, we will invest the Other portion of the Sleepy Portfolio in REITs and also summarize and analyze the holdings.