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 but no new money has been added since. This is not simply a model portfolio; it reflects investment returns that can be obtained in the real world by accounting 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.

3Q-2012 Update

The Sleepy Portfolio has gained a modest 1.8 percent since my previous update. The bulk of the gains were provided by dividend payments. Pretty much every single asset class stayed flat since my previous update. The only exception was REITs, which dropped 4.2 percent during the past quarter. REITs did gain about 10 percent in my 2Q-2012 update and the portfolio benefited slightly from selling some REITs in the previous update. Year-to-date the portfolio is up 7.3 percent.

Here’s how the portfolio looked as of October 31, 2012:

Sleepy Portfolio Balance as of Oct. 31, 2012

Since the cash position is significantly above target and emerging markets are significantly below target, we’ll perform just one rebalancing transaction this quarter.

Transaction

Buy 34 shares of VWO at $41.49. Proceeds = $1,441.82. (includes trading commission of $10 and currency conversion charge of 1.5 percent).

This article has 3 comments

  1. I’m guessing that you didn’t use Norbert’s Gambit for the $US exchange to buy VWO, because the amount purchased was too small?

  2. @madMike: That’s correct. A retail exchange rate of 1.5% is pretty much exactly the same that a Norbert Gambit would cost ~$20.

    Also, when this portfolio was started up in 2005, unfortunately, I did not use the Norbert Gambit to convert currency. So the USD portion of the portfolio took a 2% hit right off the bat.

  3. Pingback: Weekend Reading - Obama's back, fiscal cliffs and great blogs

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