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.
The Sleepy Portfolio has gained a modest 1.5% since my previous update. The big gains were made in REITs — up 9.9% since the end of last quarter. Emerging Markets ended in the losing column with a loss of 4.5%. All other asset classes were more or less flat. The portfolio also generated an income of $761 during the quarter.
Since real return bonds and REITs are significantly above their target allocations, it is time to trim them back to the original asset allocation and use the proceeds to buy into the lagging asset classes: Canadian stocks and developed market stocks.
Sell 75 shares of XRB at $25.18. Proceeds = $1,878.
Sell 183 shares of XRE at $17.64. Proceeds = $3,218.
Buy 138 shares of XIC at $19.14. Proceeds = -$2,651.
Buy 58 shares of VEA at $33.19. Proceeds = -$1,981.
It is interesting to note that the Sleepy Portfolio has fully recovered from the temporary losses in the Great Crash of 2008-09 and set a new high watermark. I hope your portfolios are looking just as healthy.