7.2%
By Gordon Pape
In February 2013 I created a model RRIF portfolio with an initial value of $49,910.30. It is oriented to income and capital preservation, with a focus on low-risk assets that provide decent cash flow. Here are the current positions with a commentary on how they have fared since the last review in mid-February. Prices are as of Aug. 24/18.
MAXA Financial five-year GIC. Our original three-year GIC matured in February 2016. We reinvested the $13,418.75 we received (principal and accrued interest) in a new five-year GIC paying 2.5%, with annual payments, which are compounded. This GIC is redeemable, so if rates rise significantly, we can cash in and trade up (albeit with a penalty). The GIC will mature in February 2021.
iShares Floating Rate Index ETF (TSX: XFR). This ETF invests in a portfolio of floating-rate bonds, whose interest payments are adjusted to reflect rate changes. It is trading at about the same price we paid in February when we acquired it. We received $0.179 in distributions, including the payment of Aug. 27.
CI Signature Dividend Fund A (CIG610). This fund invests primarily in preferred shares and dividend-paying large-cap stocks. The fund’s NAV is up $0.04 from the last review, and we received distributions totalling $0.2511 per unit.
PIMCO Monthly Income ETF (TSX: PMIF). This ETF invests in investment-grade bonds from developed countries around the world as well as some mortgage-backed securities. It pays monthly distributions, which are currently running around $0.05 per unit. The NAV was down $0.33 in the latest period, which was offset by distributions of $0.3821.
Sentry U.S. Growth and Income Fund (NCE737). This fund invests in a portfolio of U.S. dividend-paying stocks, both common and preferred, with a large-cap bias. It is coming off another good run with a six-month NAV gain of $1.18 and monthly distributions of $0.05 per unit, totaling $0.30.
BCE Inc. (TSX, NYSE: BCE). BCE shares continued to decline, depressed in part by rising interest rates. We lost $2.41 per share, which was only partially offset by two quarterly dividends totaling $1.51.
Inter Pipeline (TSX: IPL, OTC: IPPLF). The stock rallied in the latest six months, gaining $2.05 per share. We received seven monthly dividends of $0.14 each (total $0.98), due to timing.
Brookfield Infrastructure LP (TSX: BIP.UN, NYSE: BIP). This Bermuda-based limited partnership is trading at about the same level as our last review. We received two distributions totaling US$0.96.
First Asset U.S. and Canada Lifeco Income ETF (TSX: FLI). This ETF was added to the portfolio in February. It invests in a portfolio of Canadian and U.S. life insurance companies. It’s been a disappointment thus far, losing $0.96 in the six months since. Distributions totalled $0.3481 per unit.
Cash. We kept the cash balance of $2,149.82 in a high-interest savings account with EQ Bank paying 2.3%. Interest earned in the latest period was $24.72.
Comments: We recorded a gain of 2.6% in the latest period, thanks mainly to the contributions of the Sentry U.S. Growth and Income Fund and Inter Pipeline.
Since inception five and a half years ago, we have a cumulative total return of 46.3%. That works out to an average annual compounded rate of return of 7.16%. For a portfolio with a large weighting in GICs, preferred shares, and bonds, that is a decent return. Our target is in the 5% to 6% range.
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