On Jan. 1, 2009, I created five model portfolios for readers of my Mutual Funds/ETFs Update newsletter, each with an initial value of $25,000. All mutual funds and ETFs were eligible for inclusion except those funds that are available only to “sophisticated investors” through offering memorandum.

I review and update the portfolios twice yearly, and because they have been so popular with our newsletter readers, I am sharing the latest results with Fund Library users.

This week I’ll update my two registered portfolios, one designed for RRSPs and the other for RRIFs. Here is a summary of the objectives of each portfolio.

The RRSP Portfolio. This portfolio is structured in much the same way as a conservatively managed pension plan. Risk is kept to a reasonable level consistent with a long-term annualized growth target in the 6% to 7% range.

The RRIF Portfolio. Cash flow and capital preservation are the goals. The portfolio is designed to provide enough income to avoid dipping into capital for as long as possible, while shielding investors from heavy losses in market downturns. The target return is about 6% a year, although so far we have done much better than that.

Comments: Two of the equity funds in this portfolio gained more than 20% in the six months from July 1 to Dec. 31. Fidelity Canadian Disciplined Equity, one of our long-time favourites, added almost 23%, which was no great surprise considering the quality of the fund and the strength of the Canadian market during that period. But investors may have not expected the 20% gain produced by the Mawer World Investment, given the weakness of international funds in recent years. Some readers may also have been caught off guard by the 12% advance in the Beutel Goodman American Equity, although we have said that we expect better results from the U.S. market this year. 

Comments: The results were pretty much as expected, and the overall six-month return was very acceptable for a portfolio that is intended to protect retirees’ capital while generating good cash flow.

I’ll update the rest of the portfolios soon.

Gordon Pape is one of Canada’s best-known personal finance commentators and mutual fund experts and a regular contributor to the Fund Library. He is publisher of Mutual Funds/ETF Update, a monthly newsletter that provides advice on fund selection and strategies. Click here for more information on a three-month trial subscription.

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