[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.]
Since I took early October off to attend to personal matters, I forgot to provide an update on how the Sleepy Portfolio performed in 3Q of 2009. Not that it matters. The entire point of a Sleepy Portfolio is that it requires minimum investor intervention and the best strategy would be to ignore it as much as possible. But, as I noted in my Q2 update, dividend payments from portfolio components had pushed up cash levels in the portfolio to more than 8% against a target of 5%. The market crash had also pushed up the bond portion to roughly 4.5% over target and left Canadian stocks, US stocks, International stocks and REITs below their targets.
Subsequent to my Q2 2009 Sleepy Portfolio update, I rebalanced the Sleepy Portfolio in early July selling a portion of the holdings in iShares CDN Short Bond ETF (XSB) and buying iShares CDN S&P/TSX Composite ETF (XIC), iShares CDN REIT Sector ETF (XRE), Vanguard Total Market ETF (VTI) and Vanguard Europe Pacific ETF (VEA).
XSB: Sell 95 shares at $29.06 (plus $9.99 in commissions).
XIC: Buy 67 shares at $16.31 (plus $9.99 in commissions).
XRE: Buy 175 shares at $9.23 (plus $9.99 in commissions).
VTI: Buy 40 shares at $46.54 (plus $9.99 in commissions).
VEA: Buy 32 shares at $29.24 (plus $9.99 in commissions).
As an aside, one sell and four buys accounted for *all* the trading activity of the Sleepy Portfolio for the entire year. Thus, the trading costs of the portfolio add up to an extra expense of (prepare to be shocked) just 5 basis points (0.05%). Adding the trading costs to the weighted average MER of the portfolio at 22 basis points brings the total expense to less than 30 basis points (0.30%).
Here’s how the portfolio looked at the end of 3Q 2009 (it was up 8% since 2Q 2009):