By Gordon Pape, Editor and Publisher
It’s RRSP time again so let’s take a look at our RRSP Portfolio and see how it’s doing. It was set up in February 2012, so this is its seventh anniversary. The original value was $25,031.92.
About a fifth 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, mutual funds, and limited partnerships so readers who wish to replicate it must have a self-directed RRSP with a brokerage firm.
It’s RRSP time again so let’s take a look at our RRSP Portfolio and see how it’s doing. It was set up in February 2012, so this is its seventh anniversary.
The portfolio has two main objectives: to preserve capital and to earn a higher rate of return than you could get from a GIC. The original value was $25,031.92.
About a fifth 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, mutual funds, 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 some comments on how they have performed since the last review in October. Stock results are as of the afternoon of Feb. 14. Mutual fund results are as of the close on Feb. 13.
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 dropped over the summer, reflecting rising interest rates. However, the value has recovered by $0.25 since our last review in October plus we received dividends of $0.28 a share for a return of 2.7% over the four months.
iShares Canadian Universe Bond Index ETF (TSX: XBB). This ETF tracks the performance of the total Canadian bond universe including government and corporate issues. Bonds have rebounded recently as the economy slows and central banks have signalled a pause in rate increases. The fund has gained $0.83 since the last review plus we received distributions of $0.296 per unit for an advance of 3.75% in four months.
TD High Yield Bond Fund I units (TDB626). This high-yield bond fund was added in early 2017 in an effort to boost returns from our fixed income holdings. It has been a disappointment and to date we have a net loss of 1.1%.
Manulife Dividend Income Plus Fund Advisor Series (MMF4548). This is an equity fund with a small bond position. About 52% is invested in Canada, 27% in U.S. stocks, with the rest scattered around amongst other countries. The NAV is down $0.93 since the last review but that was offset by distributions of $0.9558 per unit.
Beutel Goodman American Equity Fund D units (BTG774). The unit value is down $0.82 since the last review. However, we received a year-end distribution of just over $0.99 per unit in December so we had a net gain during the period.
Invesco International Companies Fund, A units (AIM1733). This fund had been on a slide but rallied modestly in the latest period to gain 5.2%. It did not pay any distributions.
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. The share price is up $0.66 since the last review and we received one distribution of US$0.49 per unit.
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 and recovered from a temporary slump to gain $1.18 in the latest period. We received one distribution of US$0.49.
Interest. We invested $1,497.05 in an account with EQ Bank, which is paying 2.3%. We received $11.48 for the period.
Here is how the RRSP Portfolio stood as of Feb. 14. Commissions have not been factored in and Canadian and U.S. currencies are treated at par for ease of tracking.
IWB RRSP Portfolio (a/o Feb. 14/19)
| Security |
Weight |
Shares |
Average |
Book |
Current |
Market |
Retained |
Gain/ |
|
PMIF |
9.1 |
200 |
$19.83 |
$3,966.00 |
$19.72 |
$3,944.00 |
$137.60 |
+ 2.9 |
|
XBB |
6.4 |
90 |
$32.35 |
$2,911.11 |
$30.85 |
$2,776.50 |
$85.14 |
– 1.7 |
|
TDB626 |
6.1 |
400 |
$6.79 |
$2,717.30 |
$6.58 |
$2,632.00 |
$55.34 |
– 1.1 |
|
MMF4548 |
17.8 |
880 |
$9.53 |
$8,386.40 |
$8.78 |
$7,726.40 |
$893.90 |
+ 2.8 |
|
BTG774 |
22.1 |
650 |
$9.45 |
$6,145.63 |
$14.77 |
$9,600.50 |
$644.29 |
+66.7 |
|
AIM1733 |
9.1 |
400 |
$8.85 |
$3,540.00 |
$9.88 |
$3,952.00 |
$0 |
+11.6 |
|
BEP.UN |
9.7 |
110 |
$28.92 |
$3,180.72 |
$38.85 |
$4,200.90 |
$448.10 |
+46.2 |
|
BIP.UN |
18.4 |
150 |
$23.05 |
$3,457.65 |
$53.42 |
$8,013.00 |
$426.65 |
+144.0 |
|
Cash |
1.3 |
|
|
$554.86 |
|
$566.34 |
|
|
|
Totals |
100.0 |
|
|
$34,859.67 |
|
$43,411.64 |
$2,691.02 |
+32.3 |
|
Inception |
|
|
|
$25,031.92 |
|
|
|
+84.2 |
Comments: Our bond holdings did somewhat better in the latest period as market rates slipped as both the Federal Reserve Board and the Bank of Canada indicated a pause in rate hikes.
The overall portfolio registered a modest gain of $874.61 for the period, or 1.9%. In the seven years since this portfolio was launched the average annual gain is 9.1%. That’s in excess of our target, despite the weak returns of the past year.
Changes: I’m going to do a major overhaul of this fund. I don’t do this often, but the portfolio has not been performing to my standards for a couple of years so it’s time for some changes. At the same time, this provides an opportunity to reduce the carrying costs of the portfolio by replacing mutual funds with ETFs.
The changes we recommend are detailed on our RRSP Portfolio page. Please note, you’ll only be able to review those changes if you have an active subscription to our weekly IWB newsletter.