I constructed the portfolio to include bonds and defensive securities in
order to reduce risk. But I also added some growth-oriented securities,
including mutual funds that offer exposure to the Canadian, U.S., and
international equity markets. The portfolio contains a mix of
exchange-traded funds (ETFs), mutual funds, and limited partnerships, so
readers who wish to replicate it must have a self-directed RRSP with a
These are the securities currently in the portfolio, with some comments on
how they have performed since the last review.
iShares Core Canadian Short Term Corporate + Maple Bond Index ETF
(TSX: XSH). This is a short-term bond fund that invests in securities issued by
Canadian companies or by foreign corporations in Canadian currency (the
Maple Bonds). Short-term bond funds are essentially defensive positions, so
returns are low. Over the latest six-month period, this fund lost $0.14 per
unit in market value, but we received about $0.29 in distributions for a
small net gain.
iShares Canadian Universe Bond Index ETF (TSX: XBB). We added this ETF to the portfolio in February 2015. It
tracks the performance of the total Canadian bond universe, including
government and corporate issues. Bonds have gone through a difficult
period, and the market price of this ETF is down by $1.44 since our last
review in August. We received distributions of about $0.43 per unit over
the period, so we lost ground here.
Fidelity Canadian Large Cap Fund Series B (FID231).
The net asset value (NAV) of this fund is down by $0.11 since our last
review. However, we received a year-end distribution of $0.82 per unit in
late December, so we have a modest overall gain for the period.
Beutel Goodman American Equity Fund Class D (BTG774). This fund rebounded strongly in the latest six months. The unit value is up by $0.97, and we received a year-end
distribution of $0.421 per unit. The total return for the period was just
Trimark International Companies Fund Series A (AIM1733). This fund was added to the portfolio last August,
replacing the Black Creek International Equity Fund, which was not
performing to our expectations. We lost $0.05 per unit during past six
months and received no distributions. That was below average for the
category, so we’ll keep an eye on this one.
Brookfield Renewable Energy Partners LP (TSX: BEP.UN). This Bermuda-based limited partnership owns a range of renewable power
installations (mainly hydroelectric but also some wind) in North and South
America. The price took a tumble to the $36 range in December but has since
recovered to about the same level as the time of my last review. We
received two distribution totalling US$0.89 per unit over the latest six
months, and the board has approved a 5% increase in the payout starting in
Brookfield Infrastructure Partners LP (TSX: BIP.UN). This limited partnership invests in infrastructure projects around the
world. The units split 3 for 2 in September, which means for every 100
units you owned previously, you now have 150. The partnership just
announced an 11% increase in the quarterly distribution, to US$0.435,
starting in March.
We invested $1,636.43 in an account with EQ Bank, which was paying 2.25% at
the time. We received $18.41 for the period.
The following table shows how the RRSP Portfolio stood as of the afternoon
of Feb. 3 (mutual fund prices are as of the close of trading on Feb. 2).
Commissions have not been factored in, and Canadian and U.S. currencies are
treated at par for ease of tracking.
The portfolio turned in a small gain of 2.43% in the latest six-month period, thanks to strong performances from the Beutel Goodman American
Equity Fund and the Brookfield Infrastructure LP. The rest of our
securities were more or less flat.
That brings the total return in the five years since this portfolio was
launched to 67.2%. That’s an average annual compound rate of return of
10.83%, well in excess of our target.
The bond funds aren’t doing well at this point, so we’re going to diversify
our holdings. We will sell 130 units of XSH for $2,545.40 and invest the
money in the
TD High Yield Bond Fund Investor Series (TDB626). As of Feb. 2, it was priced at $6.80 per unit, so we will buy 375 units.
We’ll take $4.60 from cash to make up the difference.
We will buy another 20 units of Beutel Goodman American Equity Fund, to
bring our total to 600. The cost is $294.80. We will use $284.57 from
accumulated distributions and take the other $10.23 from cash.
We have enough retained income to buy another 10 units of Brookfield Energy
Partners for $394.70. This will bring our total to 110 and reduce our
retained income to $26.80.
Finally, we will buy 10 units of Brookfield Infrastructure LP for $459,
leaving us with cash of $161.25.
We will reinvest our cash balance of $1,237.87 in the EQ Bank account,
which now pays 2%.
The following table shows the revised portfolio. I’ll review it again in my
Internet Wealth Builder newsletter in August.
is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
The Internet Wealth Builder and The Income Investornewsletter, which are available through the Building Wealth website.
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Notes and Disclaimer
© 2017 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.
BUILDING WEALTH WITH GORDON PAPE