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moneysense.ca, 18/09/08
Rebalancing the Sleepy Portfolio
It’s more than a year since I tidied up the Sleepy Portfolio and with the recent turmoil in the stock markets, the allocations have begun to significantly diverge from their targets. The portfolio’s holdings in cash and bonds are now 31.6% compared to a target of 25%. The worst performing asset class has been the European and Pacific stock markets (tracked using the Vanguard Europe Pacific Index Fund – VEA): it is 4% below target. US stocks, REITs and emerging markets are also slightly below target but the deviation is slightly less than 1%.
Transactions:
Sell $700 worth of Money Market Funds.
Buy 120 shares of Vanguard Europe Pacific Index Fund at $34.68 plus commissions of $9.99.
The current holdings can be seen in the following table:
![[Current Sleepy Portfolio holdings as of September 2008]](http://www.canadiancapitalist.com/images/2008/sleepy_rebalanced_2008.jpg)
Our personal portfolios mostly mirror the holdings of the Sleepy Portfolio (except for Canadian stocks and REITs) but I haven’t made any changes lately apart from buying more VEA out of regular savings. If this market swoon keeps up, it might be necessary to sell some bonds and buy other asset classes that have fallen in value.
moneysense.ca, 18/09/08
Just a general question, is there a certain dollar value below which it doesn’t make sense to rebalance? I mean, you want to keep your asset percentages as close to target as possible, but if you have a small account and a 5% divergence in one class only corresponds to say 800$, is it even worth rebalancing, once you take the commissions in to account?
nobleea: Probably not. Even with a large account like the Sleepy Portfolio, I considered selling some bonds to buy VWO but decided against it because the 1% deviation means spending $20 to sell and buy $1,600 worth of securities. It’s a bit of a tough call but I think that it is best to make as little changes as possible.
[...] 70% of the portfolio allocated to equities, the Sleepy Portfolio could not be expected to escape the carnage in the stock market. The portfolio was down 10% over [...]