Rate of Return: 10.4%
Most investors tend to have a home bias when constructing their portfolios. Canada represents only about 3% of global markets, but most people hold a much higher percentage of domestic stocks. The reason is simple: the companies are more familiar.
When we do range farther afield, the focus is almost always on the US. There are compelling reasons for this. American companies are almost as familiar as our own, US stocks are easy to buy, and Wall Street has generated some excellent results in recent years.
So, it comes as no surprise that most portfolios are underrepresented when it comes to Europe, Asia, Africa, and South America. That’s an opportunity missed. Some of these markets are doing well these days, even outperforming the TSX.
As a result, the investments in our Global Portfolio scored a big gain in the six-month period from March to September. The total return for the period was 18.1%, making it one of the best performances since the portfolio was launched in March 2012.
This portfolio invests in passive ETFs that cover most of the world’s markets. There is a heavy weighting to Canada and the US, but it also offers exposure to geographic areas that many investors miss.
This portfolio is designed to provide an international model for growth-oriented investors, with the diversification and low costs that ETFs offer. The target annual rate of return was set at 8-10%.
Investors should only emulate this portfolio if they are willing to accept stock market risk. There are no bonds and little cash.
Comments: Despite all the concerns about tariffs and the slowing global economy, the portfolio posted a strong gain of 18.1% during the latest period. Every security ended up on the plus side.
The total value as of Sept. 24 was $76,171.72, up from $64,496.84 at the March review.
As a result, our cumulative gain since inception improved to 280.8%. That works out to a compound average annual growth rate of 10.41%. That’s ahead of our original target range.
Changes: We’ll use some of our retained earnings to add to our holdings as follows.
XIC – We’ll buy 10 units at $47.40, for an outlay of $474. We now own 320 units, with retained earnings of $106.72.
XSU – We’ll add five units at $46.16 for a cost of $230.80. That brings out total to 190 units, with $25.94 in reserve.
XIN – We have enough cash to buy another 10 units at $40.12, for a total cost of $401.20. Our retained earnings drop to $74.72.
We will put our cash and retained income of $1,589.32 in a new promotional savings account with Tangerine Bank, which is paying 4.5% for five months.
Here is the revised portfolio. I’ll review it again in March.