Rate of Return: 12.5%
Our IWB Global Portfolio has performed well since it was launched in March 2012. It invests in passive ETFs that cover most of the world’s markets.
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 originally set at 8-10%.
We’ve achieved that goal, and more. But the heavy lifting in recent years has been done by US tech stocks. As a result, our US weightings are too heavy.
This has reached the point where the portfolio is 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 in some cases. That means we need to do some rebalancing.
Investors should only emulate this portfolio if they are willing to accept stock market risk. There are no bonds and little cash.
Comments: Despite the impact of the Iran war, the portfolio posted a decent gain of 4.2% during the latest period. Every security except XSP and ZQQ ended up with a gain.
The total value as of March 25 was $79,343.62, up from $76,171.72 atthe September review. As a result, our cumulative gain since inception improved to 296.7%. That works out to a compound average annual growth rate of 12.47%. That’s ahead of our original target range.
Changes: The strong performance of the tech sector in recent years has added big gains to the portfolio, but it needs to be rebalanced. We have 54.6% of our assets in the US, which is too high. Our Canadian weighting at 28.8% is about right but our overseas weighting is too low at 16.2%.
Accordingly, we will sell 60 units of ZQQ at $164.62. With retained earnings, that gives us $9,877.20 to reinvest.
We will buy another 150 units of XIN at $42.63, for a total cost of $6,394.50. That gives us a new total of 330 units.
We will also buy 60 units of EEM at $57.42, for a cost of $3,445.20. We now own 145 units.
We have $37.50 left, which we will add to cash.
With the rebalancing, the portfolio now looks like this:
- US stocks: 41.8%
- Canadian stocks: 28.8%
- International stocks: 29.0%
- Cash: 0.4%
We will put our cash and retained income of $2,273.12 in a savings account with Oaken Financial, which is paying 2.8%.
Here is the revised portfolio. I’ll review it again in September.