Sleepy Portfolio

The Sleepy Portfolio Building Blocks II

March 23, 2005

3 comments

I’ve never owned bonds before. Our actual portfolio is 100% in stocks and cash. Returns for various asset classes in 2004, shows the error of my ways: bonds returned a healthy 7.15%.

For the bond portion of the Sleepy portfolio, I would like to keep things as simple as possible. Barclay’s Canada recently introduced the iBond fund (TSX: XBB) that tracks the Scotia Capital Universe Bond Index and has a reasonable MER of 0.3%. Since bond yields are in generational lows and forecasts call for bond yields to rise sooner or later, I want to keep the bond allocation at the lower end of the target.

Jan 4, 2005: Buy XBB 700@$28.93 + $29.95 commission = $20,280.95.
Current Value = $20,237.00

Tomorrow, we will consider the equity portion of the portfolio.

The Sleepy Portfolio Building Blocks I

March 22, 2005

1 comment

The four main building blocks of the Sleepy Portfolio are cash (5-10%), bonds (20-25%), equities (55-70%) and other (5-10%), which is a catchall phrase for REITs, Gold and Venture Capital etc.

For the cash portion of the portfolio, we need a T-bill or money market fund with the lowest expenses. The fund should also have low minimum requirements (less than $5000 according to our asset allocation). In an earlier post, I mentioned that the Altamira T-bill fund, which has a MER of 0.38%, is a good choice for the cash component of the portfolio. The recent elimination of foreign content rules in tax-deferred accounts, allows us to reach for yield by setting up a high-interest savings account for the cash portion. However, to keep things simple, we will invest the cash portion in the Altamira T-bill fund.

Jan 4, 2005: Buy Altamira T-Bill Fund 500@$10
Current Value: $5,017.00

Tomorrow, we will consider the bond portion of the portfolio.

Introducing the Sleepy Portfolio

March 21, 2005

61 comments

I wrote about the target asset allocation for my portfolio, a little while ago. To recap, it looks like this:

Cash: 5%
Bonds: 20%
Equities:
Canada: 20%
US: 22.5%
EAFE: 22.5%
Emerging Markets: 5%
Real-Estate Income Trusts: 5%

Inspired by several “lazy” portfolios, I want to call mine the sleepy portfolio. You can also check out earlier posts about the original couch potato portfolio and the Canadian version. My main aim for this portfolio is to benchmark performance and compare it to my actual results. Over the next few days, I will post the actual mutual funds, bonds and ETFs that make up the portfolio.

I am making the following assumptions about the portfolio:

  1. The portfolio currency is the Canadian dollar. All foreign-currency denominated assets will be converted to C$ at the prevailing exchange rate for performance tracking.
  2. The initial investment will be $100,000, invested in different asset classes on Jan 3, 2005.
  3. The investments will be in actual mutual funds, index funds, ETFs etc. When purchasing ETFs, a commission of $10 will be assumed for each buy and sell.
  4. The portfolio is assumed to be in a tax-deferred, self-directed account.
  5. All currency conversions (CAD converted to USD prior to purchasing USD ETFs, USD converted to CAD prior to purchasing CAD ETFs, USD dividends) will be assumed to cost 1.5 percent.

Annual Sleepy Portfolio report cards

:

Year Return Notes
2005 12.9% Report card here
2006 14.7% Report card here
2007 0.2% Report card here
2008 -19.9% Report card here
2009 16.8%  
2010 9.6% Report card here
2011 -1.2% Report card here
2012 10.0% Report card here
2013 20.3% Report card here

Updates

:
The other posts in the series: Portfolio Building Blocks — cash, bonds, stocks and REITs and summary.

The blended cost of the Sleepy Portfolio is just 0.22%!

A note of caution: the Sleepy Portfolio has a large allocation to equities and is a benchmark for a young, aggressive investor. Older investors may want to boost the allocation to fixed income.

This nifty spreadsheet simplifies the rebalancing process.

The Sleepy Mini Portfolio is more suitable for investors just starting out and adding a bit to the portfolio every now and then.

In 2007, some of the components of the Sleepy Portfolio were changed. The portfolio was simplified by adding VTI, VEA and VWO and the bond component was split between XSB and XRB.

In 2013, some of the Canadian components of the Sleepy Portfolio started to change to take advantage of lower-cost offerings flooding the market. The first change was replacing the iShares S&P/TSX Capped Composite ETF (XRE) with Vanguard FTSE Canada Capped REIT ETF (VRE).