Since my previous update the returns of the Sleepy Mini Portfolio has been, well, sleepy. The portfolio has more or less stayed at the steady level for the past three months and shows a modest 1.9% gain over book value since inception. Here’s how the portfolio components were valued as of February 28, 2010:

TDB909 – Canadian Bonds – $2,059 (20.2%)
TDB900 – Canadian Equities – $2,092 (20.5%)
TDB902 – US Equities – $3,099 (30.4%)
TDB911 – International Equities – $2,941 (28.9%)
Total – $10,191
Total Invested – $10,000

As per plan, it is time to once again add $1,000 to the portfolio and rebalance it to the target asset allocation — 20% bonds, 20% Canadian stocks, 30% US stocks and 30% International stocks. I use this spreadsheet to divvy up the new money between the portfolio components. You might notice that International equities are currently slightly below plan, so that’s where a disproportionate share of the new money will be added:

Transactions

TDB909 – TD Canadian Bond Index (e-Series) – Buy units for $179.41.
TDB900 – TD Canadian Index (e-Series) – Buy units for $146.28.
TDB902 – TD US Index (e-Series) – Buy units for $258.10.
TDB911 – TD International Index (e-Series) – Buy units for $416.22.

[Sleepy Mini Portfolio as of Feb. 28, 2010]

That’s pretty much it. Investing may not be easy but it sure doesn’t have to be complicated.

This article has 12 comments

  1. I just rebalanced too. 🙂

  2. Interesting… I suspect investors could make some great choices in the days ahead for more significant gains.

  3. CC – do youbenchmark this against anything? How do you define degrees of success or failure witht he Sleepy portfolio? Any comments would be most appreciated.

  4. Canadian Capitalist

    @Doctor Stock: I don’t quite understand what you are getting at. Stocks seem close to fair value at these levels.

    @Rob: The Sleepy Portfolio started out as my personal benchmark. I wanted to see how my stock picks were doing against an easily implemented portfolio. Over the years, the Sleepy Portfolio has morphed from a benchmark to more or less reflect investments in my own portfolio. I started out the Mini portfolio to show how investors can invest modest sums regularly.

    For those who follow a passive approach, the degree of success or failure will depend on how faithfully an investor sticks to their plan. The question of benchmarking does not arise for passive investors — their portfolio is essentially an benchmark. Both active and passive investors might find that their realized portfolio returns turn out to be less than the expectations they started out with. If that happens, they need to have a Plan B. Either work a bit longer, save more, live on a little less or work part-time to make up for the shortfall.

  5. However, this portfolio still is underperforming. A 1.9% return could have been in a high interest savings account or GICs — a complete no brainer! The portfolio I created to challenge Canadian Capitalist can be found here. It was drawn from local firms I was a little knowledgeable of, simply because they were common: my bank, industry in my region, my cable supplier, my coffee shop, my electric company, the railroad that wakes me in the night, etc. I have invested +/- $2000 increments on an irregular basis in this since 2007, as shown in the chart using a buy & hold strategy, and have seen a return of 17% on investment in that period.

    My point parallels CC’s that investing can be simple & straightforward, simply by investing in what you know!

    PS, in hindsight, POT should have been missed in my purchase plans. Maybe it’ll disappear in a “rebalancing”.

    DAvid

    • Canadian Capitalist

      @DAvid: Ah, but the race ain’t over yet! It’s barely getting started. It should be noted that this is a model portfolio. If yon’t like the 60% allocation to foreign stocks, cut it down to 30%. Is the 20% allocation to bonds too risky for you? Make it 40%. I’m not too fussed about the actual allocations. The point of this exercise is that it is possible to *passively* invest modest sums of money on a regular basis. Sure, you can go the active route but along with the possibility of out performance comes the risk of under performance. Many investors are okay with that but be sure to benchmark your performance because you can get market returns with very little effort.

  6. @David, looking at 3 year returns is almost meaningless. Passive approach wins over longer time horizons (10, 15, or 20+ years).

  7. @Brian:
    You have data to support your 20 year contention? ETFs have only become generally available in Canada in the past 5 years or so, and furthermore, buy & hold, too, is a form of passive investing.

    Finally, do ETFs pay dividends? In BC you can have annual income of $70,000 plus, and if solely dividend income, pay no taxes on that income. This has the potential to almost double my income.

    @CC:
    Mine too is a model portfolio. I can re-create it to more closely mimic the sleepy portfolio in contributions, but based on the performance so far, the sleepy portfolio has not yet matched readily available GIC’s since 2007.

    I believe that challenge is to meet one’s expectation of return. Since some stocks show great returns, we all want those, but settle for less (or average). Anyone wish they’d bought TCK.B 12 months ago?

    DAvid

  8. Pingback: Sleepy Mini Portfolio Q2-2010 Update | Canadian Capitalist

  9. Pingback: Sleepy Mini Portfolio Q2-2010 Update | MoneySense