[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:
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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