Comments on: Sleepy Mini Portfolio Q2-2009 Update

By: Peter

Peter — Thu, 03 Sep 2009 21:27:40 +0000

From what I understand, you should not rebalance too often. You want a portion of your portfolio that’s doing unusually well to build up some steam! Minimum time I’ve seen suggested is every year, but in times like these there may be key points where you should rebalance right away.

By: Sleepy Mini Portfolio Q3-2009 Update | Canadian Capitalist

Sleepy Mini Portfolio Q3-2009 Update | Canadian Capitalist — Wed, 02 Sep 2009 02:41:44 +0000

[...] 1st, 2009 · With the stock markets continuing to trend higher since our last update, the Sleepy Mini Portfolio, a simple, passive portfolio constructed with low-cost, index funds, is [...]

By: Canadian Personal Finance Blog » Blog Archive » Random Thoughts: Stay In Balance

Fri, 05 Jun 2009 07:44:32 +0000

[...] Canadian Capitalist did an update on his Sleepy Mini Portfolio (I base one of my RRSP’s on this set of index funds). Remember the importance of re-balancing [...]

By: jlocicero

jlocicero — Thu, 04 Jun 2009 15:17:48 +0000

@Canadian Capitalist
That’s interesting to learn. When I read about portfolios and rebalancing, you are often encouraged to rebalance every year. I assume that means once a year, but if I remember correctly, the authors never talk about adding new money. Or they add new money once a year.

Do you think there is any downside to rebalancing so often? Do you have a threshold amount of new money you must add, say $1000, before you will rebalance?

Thanks!

By: Canadian Capitalist

Canadian Capitalist — Thu, 04 Jun 2009 15:09:00 +0000

@ghandy: In my personal portfolios, I use XSB for larger portfolios and TDB909 for smaller portfolios. Yes, I agree that short-term bonds are better but an extra 0.5% is a lot to pay extra.

http://www.canadiancapitalist.com/short-term-versus-long-term-bonds/

@jlocicero: I rebalance every time I add money. Actually, I’ve been lazy about rebalancing the original Sleepy Portfolio. I will do that one of these days and post it here.

@anon: This topic has been covered so many times in past posts. Please search for “currency hedging”. Here’s one such post:

http://www.canadiancapitalist.com/the-costs-of-currency-hedging/

As John points out, if you take on equity risk, I don’t see why you should avoid currency risk. The costs of hedging are certain; it is going to cost you 1% per year but over the long-term that is a high hurdle to overcome just to break even.

By: John

John — Thu, 04 Jun 2009 12:20:56 +0000

@ anon: One other thing I wanted to add was that I knew I was holding the fund long term ie>10 yrs so forex costs were not a big deal.

By: John

John — Thu, 04 Jun 2009 12:18:44 +0000

@ anon: CC has a post covering this topic -April 17th 2007- one of his comments “My personal preference is to invest directly in US-listed ETFs without hedging currency exposure because in my opinion, hedging is simply chasing performance after the Canadian dollar has run up significantly. Recall that hardly any mutual fund or ETF engaged in hedging when the loonie was in the dumps but now it is a popular selling feature. Why pay an extra fee when currency fluctuations will even out over the long term? It is so predictable – investors are always fighting the last war.” Another thing I took from that post was the advantage of the loonie getting stronger was that you have more purchase power and can buy more VTI for your dollar…sort of like dollar cost averaging.

I looked hard before buying VTI myself and decided it was the best option for value. Your not paying expensive MER’s , your not paying for hedging..you just pay for a top notch fund at low value.

Thought I would jump in just in case CC didn’t have time to get back to you.

By: anon

anon — Thu, 04 Jun 2009 08:05:05 +0000

dear cc,

i recently recommended to a friend that they by VTI etf for their rrsp account, and after a little while got a question about why the account had lost money even though the stock price had gone up… they then saw that it was the exchange rate…

I realized that it’s the exchange rate.. i’m getting screwed. I don’t like having US fund stocks – exchange rates can be so volatile, you save a tiny amount on fees and then can easily have a 10% overall loss on exchange.. or even more. I’ve looked at exchange rate histories, and they change way more than the stockmarket index, so if you have to take out your money when exchange is bad all your losses are going to be there. since the Canadian trends pretty much mirror the US regardless of exchange rate, i think i’m going to stick with Canadian funds instead. Too bad it’s too late now.

any thoughts on this?

By: jlocicero

jlocicero — Wed, 03 Jun 2009 21:46:01 +0000

Canadian Capitalist, do you rebalance every time you add new money? If not, at what threshold do you rebalance?

And how often do you add new money? Thanks!

By: ghandy

ghandy — Wed, 03 Jun 2009 13:37:07 +0000

CC: on the topic of bonds, how do you weigh the options between TDB909 (MER 0.48, but longer term) vs. something like TDB967 (MER 1.05, but a short-term bond) vs. XSB. I have a relatively small portfolio and make monthly contributions.