Saturday, December 29, 2012

Asset Allocation at YE12

Before E-trade Canada was acquired by Scotiabank, they used to have this great asset allocation screen where you could go to see the breakdown of asset classes within your portfolio. Being a firm believer in diversification by asset class, I really miss that valuable output. Having a couple spare minutes, I decided to do some high-level calculations of my investment holdings at year end 2012.

I wasn't surprised to find out that 27.4% of my total investment holdings were in bank stocks. Shares of Canadian banks have historically been great dividend growers. Given their weight in my portfolio, I'm betting on this trend continuing in the future.

My second highest asset class is telecommunications/cable companies that represent about 21.3% of my total holdings. I'm a fan of the big 3 telco's in Canada (BCE, Rodgers, and Telus), as they've all proven successful at increasing their dividends at regular intervals over recent years.

My last two most popular asset classes are mainly used since I know I'm too heavily weighted in banks and telco's. I own shares in three REITs (Riocan, Dundee, and H&R) and they account for 12.4% of my total portfolio holdings. Similarly, a colleague at work introduced me to energy/pipeline companies, and I've jumped into Enbridge, TransCanada, and the Inter Pipeline Fund, to the point where they now account for 11.2% of my total portfolio.

The last calculation I performed was to determine how much of my total holdings are US companies. Given the greater array of large, steady, dividend increasers south of the border, I've tried to add more of these companies to my RRSP (to avoid the 15% withholding tax on dividend payments). With my October purchase of Western Union, US stocks now represent 19.9% of my total holdings. Given I've recently thought about buying some shares of Intel, I expect that number to grow closer to 25% in early 2013.


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