Review and update: Pape’s Global Portfolio

Another strong gain in latest six-month period

Asset allocation is a key component of portfolio construction, but it should go well beyond the basic asset categories of equities, fixed income, and cash. Sector allocation should be considered as well as beta allocation (growth vs. value stocks) and geographic allocation.

We created the IWB Global Portfolio in March 2012 to provide readers of the Internet Wealth Builder newsletter with an easy to replicate model of passive ETFs that cover most of the world’s markets.

This portfolio is designed to provide an international model for growth-oriented investors, using the diversification and low costs that ETFs offer. The target annual rate of return was originally set at 8%-10%. We’ve achieved that goal, and more. But the heavy lifting in recent years was done by US tech stocks. As a result, our US weightings became too heavy.

While I like to keep riding a winning wave, there comes a time when the risk/reward balance must be reassessed. We did that in our March 2026 review, at which time we trimmed our exposure to Nasdaq and added to our Canadian and emerging markets holdings. Tech continued to do well over the summer, but our enhanced exposure to Canada and overseas markets also produced profits and our geographic balance improved. The net result was a strong gain for this portfolio during the latest six-month period, combined with reduced risk.

That said, investors should only emulate this portfolio if they are willing to accept stock market risk. There are no bonds and little cash to shield us in the event of a wide-scale meltdown in equities.

Here’s a look at how our ETFs have performed since the last update in March. Results are as of Sept. 23.

iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC). This ETF tracks the performance of the S&P/TSX Composite Index. The TSX reached an all-time high earlier this year, then pulled back, along with other global markets, after the start of the Iran war. That setback didn’t last long. By August, the TSX had not only recovered the ground it had lost but had set another new record. It has since retreated a little but is still up about 12% year-to-date. This ETF is up 10.6% since the March update. We received two quarterly distributions for a total of $0.563 per unit.

iShares S&P/TSX Small Cap Index ETF (TSX: XCS). This fund tracks Canadian small-cap stocks. They have been strong in the latest period, and these units are up $3.57, or 11%. This is mainly due to the number of mining and energy stocks in the small cap sector. We received two quarterly distributions totaling $0.309 per unit.

iShares US Small Cap Index ETF (CAD-Hedged) (TSX: XSU). US small-cap stocks continued to do well, with these units up $5.28 during the latest six-month period. We received a semi-annual distribution of $0.178 in June.

iShares Core S&P 500 Index ETF (CAD-Hedged) (TSX: XSP). This ETF tracks the performance of the S&P 500, hedged back to Canadian dollars. The rapid rise of AI has pushed it higher this year, with a gain of $10.48 in the latest period. We received a semi-annual distribution of about $0.302 per unit in June.

BMO Nasdaq 100 Equity Hedged to CAD Index ETF (TSX: ZQQ). This fund provides exposure to the top 100 stocks on the Nasdaq exchange. The tech sector, which dominates Nasdaq, which had been showing signs of slowing growth, got a big boost from the rapid development and monetization of AI in recent months, and this ETF gained $40.98 per unit in the six-month period. We did not receive any distributions.

iShares MSCI EAFE Index ETF (CAD-Hedged) (TSX: XIN). This ETF tracks markets in Europe, Australasia, and the Far East. The Iran war had a negative impact on those markets, but it still managed to generate a net profit of $4.04 for these units over the six-month period. We received a semi-annual distribution of $0.591 per unit in June.

iShares MSCI Emerging Markets ETF (NYSE: EEM). Emerging markets were hit by the closing of the Strait of Hormuz, but this fund still managed a gain of $10.29 per unit. We received a mid-year distribution of $0.351 per unit.

We have cash and retained income of $2,886.84. We’ll take advantage of a promotion to earn 4.6% (annualized) for five months on a new high interest savings account with Simplii Financial.

Here’s a look at how the portfolio stood on Sept. 23. The Canadian and US dollars are treated at par, and commissions are not considered. The percentage in the Gain/Loss column represents the cumulative return since the portfolio was launched or since the security was added. The initial book value was $20,002.30.

Comments

Despite all the negative forces weighing on the markets, the Global Portfolio gained 14.5% during the latest six-month period. Every security ended up with a profit, in some cases very large ones. ZQQ was ahead almost 25%, as tech stocks rode the AI boom. EEM gained 17.9%, validating our decision to increase its weighting in March.

The total portfolio value as of Sept. 23 was $90,874.89, up from $79,343.62 at the time of the March review. As a result, the cumulative gain since inception improved to 354.32%. That works out to a compound average annual growth rate of just over 11%. That’s ahead of our original target range.

Changes

We’ll stand pat for now. The rapid rise in interest rates and the disruption in global bond markets suggests caution at this stage. I’ll review the portfolio again in my Internet Wealth Builder newsletter in March.

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.

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Notes and Disclaimer

Content © 2026 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.

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