Initial Value $25,031.92
February 20, 2012
Update Value $58,257.89
February 24, 2020
By Gordon Pape
Our IWB RRSP Portfolio has two main objectives: to preserve capital and to earn a higher rate of return than you could get from a GIC. It was launched eight years ago with an original value of $25,031.92.
About a third of the portfolio is in bonds and cash. The balance is in growth-oriented assets that offer exposure to the Canadian, U.S., and international equity markets. The portfolio contains a mix of ETFs, stocks, and limited partnerships so readers who wish to replicate it must have a self-directed RRSP with a brokerage firm.
These are the securities currently in the portfolio with comments on how they have performed since the last review in August. Results are as of the afternoon of Feb. 19.
PIMCO Monthly Income ETF (TSX: PMIF). This fund invests in a portfolio of global bonds and pays monthly distributions. It was added in February 2018 at $19.83. The unit value has moved higher in recent months, as interest rates have fallen. We received distributions of $0.448 a unit for the period, including a large December payment of over $0.20.
iShares Canadian Universe Bond Index ETF (TSX: XBB). This ETF tracks the performance of the total Canadian bond universe including government and corporate issues. The fund edged up $0.13 since the last review plus we received distributions of $0.442 per unit.
iShares Canadian Corporate Bond Index ETF (TSX: XCB). This fund invests exclusively in corporate issues, as opposed to XBB, which covers the entire Canadian bond universe. It was added to the portfolio in February 2019. So far it has performed well, with a total one-year return of 8.2%. That’s very good for a bond fund, but not sustainable.
iShares U.S. High Yield Bond Index ETF (CAD-Hedged) (TSX: XHY). This fund tracks the performance of the U.S. high-yield bond market. It was added to the portfolio in February 2019 and generated a total return of 8% in the twelve months since.
iShares Convertible Bond Index ETF (TSX: CVD). This fund invests in bonds that can be converted into common stocks under certain conditions. It offers a play on the stock market while providing cash flow as well. It was also added in February 2019 and is ahead 6.8% since.
iShares Core U.S. Aggregate Bond ETF (NYSE: AGG). This ETF aims to replicate the returns of the total U.S. bond market. It was added last August to give us more exposure to American bonds. The total return to date is a modest 2.3%.
First Asset Canadian REIT ETF (TSX: RIT). There are several good REIT ETFs available, but we chose this one in February 2019 because it has the broadest diversification. The timing was good – REITs have performed well in a falling interest rate environment and we have a total twelve-month return of 20.6%.
iShares Edge MSCI Minimum Volatility USA Index ETF (CAD-Hedged) (TSX: XMS). XMS invests in low-beta U.S. stocks such as Coca-Cola, Visa, McDonalds, and Verizon. Low beta means they are less sensitive to broad market movements and, therefore, less risky We added it to the portfolio last August and it is doing well so far with a six-month gain of 9.6%.
BMO Low Volatility Canadian Equity ETF (TSX: ZLB). This ETF invests in a portfolio of large-cap Canadian stocks that have a low beta history. It was among the many new securities added in February 2019 and has done well so far with a one-year gain of 19.5%.
BMO Low Volatility International Equity Hedged to Canadian Dollar ETF (TSX: ZLD). This ETF focuses on international stocks and is hedged to Canadian dollars, so the currency risk is removed. It was added to the portfolio a year ago. This ETF gained $2.30 in the latest six months and we received two distributions of $0.14 each.
Brookfield Renewable Energy Partners LP (TSX: BEP.UN, NYSE: BEP). This Bermuda-based limited partnership owns a range of renewable power installations (mainly hydroelectric but also some wind), mostly in North and South America. Renewable energy stocks continue to be in high demand and the unit price is up $26.34 since the last review. We received two distributions totalling US$1.03 per unit. The partnership announced a 5% distribution increase, effective with the next payment.
Brookfield Infrastructure Partners LP (TSX: BIP.UN, NYSE: BIP). This limited partnership invests in infrastructure projects around the world. It has been the best performer in the portfolio for some time and gained $13.27 in the latest period. We received two distributions totaling US$1.005. The distribution will go up by 7% effective with the next payment.
Interest. We invested $1,673.76 in a high interest savings account. We received $23.43 for the period.