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The last time the Bank of Canada lowered its target interest rate was in March, but interest-sensitive stocks have been reacting as if it had never paused.
Utilities, pipelines, banks, and telecoms have been edging higher all year. The result was a gain of 6.7% for my Internet Wealth Builder RRSP Portfolio for the six months from February 21 to August 21.
I know, no one is interested in RRSPs in August. But you should be. An RRSP is your personal pension plan, and it needs care and attention. That means reviewing it periodically to see if changes are needed. I revisit our model RRSP Portfolio twice annually.
I launched this portfolio in February 2012. It has two main objectives: to preserve capital and to earn a higher rate of return than is available from a GIC. The original value was $25,031.92.
The portfolio contains a mix of ETFs and stocks, so readers who wish to replicate it must have a self-directed RRSP with a brokerage firm.
These are the securities currently held by the portfolio, with comments on how they have performed since the last review in early September. Results are as of the afternoon of Aug. 21.
iShares 0-5 Years TIPS Bond Index ETF (TSX: XSTP). This ETF invests in short-term U.S. Government inflation-protected notes. They pay a low rate of return, but both the face value and the interest increase as inflation rises. This provides downside portfolio protection. The units are down $0.35 since the last review in February. We received distributions that totaled $0.845 per unit. Note that while distributions are monthly, they vary considerably in amount.
CI High Interest Savings ETF (TSX: CSAV). We added this high interest ETF at the time of our review in August 2023. It was trading at $50 at that time, and it’s designed not to vary too much from that level. This fund invests in high-interest deposit accounts at Canada’s major banks. It earns a better rate of return than a retail customer can obtain because of its hefty purchasing power. The units are down $0.01 since the last review, and we received monthly distributions totaling $0.648 a unit. Note that as interest rates fall, the payout will decline.
BMO S&P/TSX Banks Equal Weight Index ETF (TSX: ZEB). This ETF invests in shares of the Big Six Canadian banks. Banking stocks have done well in recent months, and this ETF has benefited, with a gain of $6.04 a unit. Monthly distributions totaled $0.855.
iShares Edge MSCI Minimum Volatility USA Index ETF (CAD-Hedged) (TSX: XMS). XMS invests in low-beta U.S. stocks. Low beta means they are less sensitive to broad market movements and, in theory, less risky. The fund posted a small gain of $0.04 in the latest period. Quarterly distributions totaled $0.208 a unit.
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’s up $6.61 since the last review. We received two quarterly distributions for a total of $0.56.
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 gained $1.20 in the latest period. Distributions totaled $0.34 a unit.
Brookfield Corporation (TSX: BN). Brookfield operates in a range of business areas including real estate, asset management, renewable resources, infrastructure, and insurance. The stock continues to edge higher and is up $2.68 since the last review. We received two quarterly dividends for a total of $0.252.
Enbridge Inc. (TSX: ENB). Enbridge offers an attractive yield (currently 5.7%) and modest capital gains potential. The stock is up $6.44 since the last review, and the quarterly dividend is $0.9425.
Fortis Inc. (TSX: FTS). Interest-sensitive stocks did very well in the latest period, with Fortis gaining $8.17. We received two dividends of $0.615 a share.
Manulife Financial Corp. (TSX: MFC). We replaced BCE with Manulife at the time of our last review in February. The stock is down slightly since, but due to timing, we received three dividends for a total of $1.32 a share. The net result was a small gain of 1.7% for the six months.
Interest. We had a cash balance (including retained income) of $2,946.12. We kept it in EQ Bank which was paying 2% on retirement accounts. We received interest totaling $29.46.
Here is how the RRSP Portfolio stood as of Aug. 21. Commissions have not been factored in. All amounts are in Canadian dollars.
Every security in the portfolio showed a profit in the latest period, although a few were very small. The biggest gains were posted by Fortis, Enbridge, and the BMO Low Volatility Canadian Equity ETF.
Over the 13 1/2 years since the portfolio was launched, we have a total return of 225.3%. That’s an average annual compounded rate of return of 9.16%, well ahead of our target.
The portfolio is performing well and has significant downside protection through its holdings in XSTP and CSAV. Therefore, we won’t make any changes at this time, other than reinvesting some of our retained earnings as follows.
XMS – We’ll buy another 10 units for a cost of $386.60. This will give us 160 units and clear out all retained earnings. We’ll take $11 from cash to make up the difference.
ZLB – We’ll use all our retained earnings to buy 10 units for a cost of $552. We now own 170 units. We’ll take $2.32 from cash to complete the transaction.
The new cash balance (including retained income) is $3,061.22. We will move it to Tangerine Bank which is offering a promotional rate of 4.5% for five months on new accounts.
Here is the revised portfolio. I’ll review it again in my Internet Wealth Builder newsletter in February.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/Photobuay
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