[Note: I started the Sleepy Portfolio in 2005 to benchmark my personal portfolio, which was then invested mostly in individual stocks. The portfolio started off with an initial cash infusion of $100,000 but no new money has been added since. The portfolio has the following asset allocation: 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 High-Interest Savings Accounts available through many discount brokers.]

With markets continuing to rally through the fall, the Sleepy Portfolio, which is mostly invested in broad-market Exchange-Traded Funds gained a further 4.55% and ended the year up 9.56%. As I pointed out in yesterday’s post, Canadian stocks and REITs were the best performers in 2010. The Canadian Dollar gained 5.7% versus the US Dollar and dragged down returns from international markets. In keeping with the sleepy nature of the portfolio, the portfolio saw just one transaction for the entire year resulting in an additional trading expense of just 0.8 basis points (0.008 percent).

Here’s how the portfolio looked at the end of 2010:

[Sleepy Portfolio holdings as of Jan. 3, 2011]

The cash balance of the portfolio increased substantially during the quarter due to dividend income. The rally in the stock markets has also left the bond component below target. So, that’s where the accumulated cash will be channelled.


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This article has 6 comments

  1. I sure would be nice to have two more columns to help me look at your progress. They would include the original investment and growth since 2005 by line. Thanks, I enjoy following your progress and rules of engagement.

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  3. In regards to the cash portion, when I followed the link to the info on what HISAs you were using it seems like the interest rate earned is low compared to some of the rates available right now through other HISAs or even TFSAs. Is there a reason why you chose to the ones you did? Even Cdn Tire is currently paying 3.5%.

    • @marie: The High Interest Savings Accounts through discount brokers do earn a lower interest than you can obtain elsewhere. ING Direct, for instance, offers an interest rate of 1.5% but most high interest accounts pay 1.25%. I like these accounts because if you don’t keep tens of thousands of dollars in cash, you might value the quick access to cash these accounts provide in a brokerage account over the higher interest rate available elsewhere. Besides, it’s hard to keep the cash portion in an ING Direct account and your stocks in a TD Waterhouse RRSP.

  4. Thanks. I thought it may be for the reason of easy movement of cash into your TD investments. My partner and I are looking at selling our company this year and will be in the position to look at investing a large amount of cash and thought about this as well. Im assuming if we choose TD E-funds it would be easier (or required?) to do as you did with a similar TD cash account?

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