The Loonie Portfolio: Asset allocation and half-year performance

The bloggers over at TheMoneyWriters have been posting their investment portfolio performance for the first half of 2008, in many cases including their asset allocation as well. I thought I'd throw together my own data, to share my own performance over the last six months.

Allocation

My entire investment portfolio is in RRSP accounts, one self-directed account at my discount brokerage and a group RRSP through my employer. These accounts have the following asset allocation:

Self-Directed RSP

• Canadian Equity Fund (S&P/TSX Composite): ~50%
• US Equity Fund (S&P 500): ~10%
• International Equity Fund (MSCI EAFE ND): ~20%
• NASDAQ Fund (NASDAQ 100): ~10%
• Canadian Bond Index Fund: ~10%

Employer Group RRSP

• Employer Stock: 100%

I contribute to the employer group RRSP on a bi-weekly basis through payroll deduction. Note that my employer's stock is not factored into the percentages in the self-directed account.

Performance

I started the year with a portfolio value of $42,266.23, and the following asset allocation:

• Canadian Equity Fund (S&P/TSX Composite): 47.1%
• US Equity Fund (S&P 500): 9.0%
• International Equity Fund (MSCI EAFE ND): 18.4%
• NASDAQ Fund (NASDAQ 100): 9.5%
• Canadian Bond Index Fund: 9.7%
• Employer Stock: 6.3%

In the last six months, I have contributed $10,478.82 to my RRSPs, including direct contributions, employer matching contributions, and DRIP payments. Excluding these contributions, the "organic" current value of my portfolio is $40,991.66 (the June 30 value of the shares I held on December 31). This represents a loss of $1,274.57 (3.02%), due to an across-the-board decline in the value of my investments.

When I include my recent contributions, my portfolio value increases to $51,799.51, with the following asset allocation:

• Canadian Equity Fund (S&P/TSX Composite): 45.8%
• US Equity Fund (S&P 500): 8.0%
• International Equity Fund (MSCI EAFE ND): 16.6%
• NASDAQ Fund (NASDAQ 100): 8.7%
• Canadian Bond Index Fund: 8.1%
• Employer Stock: 12.9%

My employer's stock now makes up 12.9% of my total investment portfolio, so I'll have to keep an eye on how high this proportion gets. Overall, I'm down $945.54 from where I would be by adding my $10,478.82 in contributions to my starting balance of $42,266.23. If I take $47,505.64 = $42,266.23 + $10,478.82 / 2 as a proxy for my starting balance (basically assuming that half my contributions were invested for the full six months), then this represents a negative annualized growth of -3.94%.

Impressions

4% negative annual returns aren't too great, but there are a few mitigating factors here:

• Only $8,803.48 of the $10,478.82 in contributions was actually out-of-pocket money on my part; the other $1,675.34 came from employer matching and DRIPs, so that makes me feel a little better about the $945.54 loss.


• When I compare my current portfolio to where I would be if I had kept my concentrated position in my employer's stock, I'm up by over $2,500. This alone is enough to make me feel better; I'm a lot better off than I could be, and it's as a result of a conscious choice I made.


• All the markets are down. In fact, the S&P/TSX Composite has dropped nearly 4%, and the Dow Jones, S&P 500 and NASDAQ are all down more than 10% over the last 6 months. My 2% loss over the same period doesn't look too shabby.


• I'm still buying. By continuing my bi-weekly contributions, I'm getting some great dollar-cost-averaging going on, so I'm picking up some great bargains on stocks.

How are your investments doing so far this year?