In my last column, I wrote about the five model portfolios I have created for my Mutual Funds/ETFs Update newsletter and provided a performance review and update for Growth Portfolio. This week, let's look at how the two registered portfolios fared in their first full year.

Back in January 2009, when the world was a very different place, I decided to take my Mutual Funds/ETFS Update newsletter in a new direction.

There was a recent Nanos Research poll that examined the most trusted professions (where honesty and ethics were the main criteria) in Canada and to the surprise of nobody; doctors and pharmacists top the poll at 77% and 72% respectively. Also in the top five were teachers, police officers, and clergy. At the bottom of the list (18 professions were used in total) were stockbrokers, business executives and car salespeople.

Back on Halloween night 2006, Finance Minister Jim Flaherty dropped a bomb on the Canadian income trust sector. He announced that a new tax would be imposed on trusts that would put them in roughly the same position as corporations.

There are times when our securities regulators are much too politically correct for my liking. A vital part of their mandate is to protect investors but often they are reluctant to impart specific information that would enable people to make more informed decisions about where to put their money. Why? Is it because they don't want to embarrass anyone?

What a difference a year makes! At the beginning of 2009, we were staring into the abyss of a global financial collapse and a catastrophic economic depression. As 2010 opens, we are not completely out of danger but the prospects for a recovery are steadily improving.

It’s a New Year and stock markets have righted themselves after a disastrous 2008.Chances are your personal balance sheet is looking better in 2010 and may continue to improve as infrastructure funds around the world are deployed(creating jobs and putting money into people’s pockets where it will quickly disappear into the economy as they spend it).

Best wishes for 2010

IIROC invites public comment on arbitration program: Regulator proposes to raise the program award limit from $100,000 to $350,000 which equals the OBSI limit.
http://docs.iiroc.ca/DisplayDocument.aspx?DocumentID=53EFECBB717E4C40A0E24433AB5F6707&Language=en Comments will be accepted until March 16, 2010.All comments will be posted on the IIROC website.

Canadians are conservative by nature. Perhaps that explains our current love affair with balanced funds. At times when the market tumbles, as it did from the autumn of 2008 to March of this year, bonds help to cushion the blow.

Asset Location: It’s Not What You Make That Counts – It’s What You Keep!

“The hardest thing in the world to understand is the income tax.” -Albert Einstein

A central problem confronting investors is how to efficiently invest the funds held in their taxable and tax-deferred savings accounts. The problem involves making both an optimal asset allocation decision (i.e., deciding how much of each asset to hold) and an optimal asset location decision (i.e., deciding which assets to hold in the taxable and tax-deferred accounts).Investors would like to make these decisions to reduce the tax burden of owning financial assets, while maintaining an optimally diversified portfolio over time. They must do this under conditions of uncertainty as yields and tax rates tax rates are variable and unpredictable over time. Asset location is a optimization strategy that takes advantage of the fact that different types of investments get different tax treatments and have different constraints. For instance using this strategy, an investor determines which securities should be held in tax-deferred accounts and which securities should be held in taxable accounts in order to maximize after-tax returns. Some advanced mathematics has been applied to tackle this complex problem. This article will explain the basic ideas behind asset location and how it can improve portfolio performance.