Background: I started the Sleepy Portfolio in 2005 to benchmark my personal portfolio, which at that time was mostly invested in individual stocks. The portfolio started off with an initial outlay of $100,000 and no new money has been added since. This is not a model portfolio; it reflects investment returns that can be obtained in the real world because it accounts for costs such as spreads, trading commissions, MERs, foreign exchange conversion charges etc. The portfolio is assumed to be held in a registered account, so it does not take taxes into account. The portfolio has a target allocation of 5% cash, 15% short bonds, 5% real return bonds, 20% Canadian stocks, 22.5% US stocks, 22.5% Europe and Pacific, 5% Emerging markets and 5% REITs. The entire portfolio (apart from the cash portion) is invested in broad-market, exchange-traded funds (ETFs) trading in the Canadian and US stock exchanges. The cash portion is invested in a high-interest savings account that is available through many discount brokers.
The Sleepy Portfolio gained 4.35% during the first quarter of 2012. The big gains were provided by international stocks: US stocks gained 9.5%, Emerging markets were up 10.2% and European stocks were up 5.9% (all returns in Canadian dollar terms). The portfolio also generated an income of $673 during the quarter.
It has been a while since even a single transaction was made in the portfolio and as a result the cash position has now ballooned to 2.4% over target. With European markets stuck more or less in neutral, the allocation to EAFE markets now has a shortfall of 3.55%. Over the next few days, $3,268 worth of cash equivalents will be redeemed and the proceeds will be used to purchase roughly 100 shares of the Vanguard MSCI EAFE ETF.