My Portfolio

Do as I say, Not as I do?

January 3, 2007


Dave at Investing Intelligently noticed that my benchmark Sleepy Portfolio returned a stellar 14.7% in 2006 and asked the obvious question: Why do I even bother with individual stocks instead of taking a passive approach using ETFs? It is a good question and as a matter of fact, I am slowly increasing the percentage of portfolio that is indexed. However, there are some very good reasons why I am not getting there sooner:

  • I still plan to represent the Canadian equity portion of the portfolio using stocks because our capital markets are concentrated in just two sectors: resources and financials. The financial sector can be captured using just a few stocks and I am not very keen on the resource sector for the long-term: it is too volatile and too cyclical.
  • It is possible that my stock selections would be truly awful (I once held Nortel and JDS-Uniphase) but I am willing to live with that. Canadian equities form just more than 20% of my total allocation.
  • Most of our new money is invested through RRSPs, ESPPs and RESPs. I’ve noted before that I invest my RRSPs in a Canadian mutual fund. We do not have much choice in ESPPs and the RESPs are indexed using TD eFunds.
  • I do plan to eventually replace every US stock I hold with ETFs such as VTI, EFA and EEM/VWO. I do not think that it is prudent to sell them en masse but as I sell them periodically, I will buy an index fund with the proceeds.

In a few years’ time, I hope to have a mostly indexed portfolio with a handful of Canadian equities.

The 2005 Reportcard

December 28, 2005

1 comment

According to Microsoft Money, my portfolio returned 13.5% in 2005. My target “Sleepy” portfolio composed largely of ETFs returned 12.6%.

I bought the following stocks over the course of the year:

Anheuser-Busch (BUD): Buy: $46.71. Now: $43.51.
AIG (AIG): Buy: $53.84. Now: $68.41.
Home Depot (HD): Buy: $38.26. Now: $41.09.
Bank of Nova Scotia: Buy: $42.07. Now: $46.84.
Bell Canada Enterprises (TSX: BCE): Buy: $28.36. Now: $27.84.
AGF Fund Management (TSX: AGF.NV): Buy: $16.40. Now: $22.20.

I also sold the following stocks:

Canadian Natural Resources (TSX: CNQ): Sold: $39.97. Now: $58.20.
Sears Canada (TSX: SCC): Sold: $23.72. Now: $17.85 (after a $18.64 dividend).

I track most of my buy and sell decisions through this blog and when I look back, I sold my winning positions too early. Sears Canada, for instance, was able to command a much higher price for its financial division than I had anticipated and its American parent also bought out its retail operations. But, as they say, hindsight is always 20/20.

Selling XIN; Buying EFA

October 15, 2005


I am selling the iUnits MSCI International Equity Index RSP Fund (TSX: XIN) and buying the equivalent iShares fund that track the MSCI EAFE Index. The XIN ETF has a total expense ratio of 0.5% versus 0.35% for the EFA and provides currency hedging for the extra fee. Since, I am investing for the very long term, I’ve decided to forgo the currency-hedging feature and save the small fee differential between the two ETFs.

It probably doesn’t make sense to sell the XIN and buy the EFA with the proceeds, but I am in the process of increasing my international equity exposure to my target levels. It would take a $20,000 investment in the EFA for a full year just to get back the commission involved in selling the XIN. And of course, there are the currency conversion charges on top of it. But, over ten or twenty years, I am hoping that the small savings will add up.