Q: Hello 5i Team
From previous answers, you have stated portfolio / sector allocations are a personal decision.
Currently I have approximately 20 % of my Canadian Equity Dividend (i.e. TSX dividend stocks) portfolio in the financial sector.
The financial sector holdings are divided into the following sub-category (industries) with representative stocks in each sub-category:
Asset Management – (BAM / BN)
Banks – (BMO / BMO / CM / RBC / TD)
Insurance (Life) – (GWO / MFC / SLF)
Insurance (P&C) – (DFY / FFH / IFC)
Questions:
1 – What would be appropriate percentages for each subcategory? An example would be should Banks be 50 % of the financial sector holdings (or 10 % of total equity holdings)?
2 – Is there any other sub-sector of the financial sector that I should be looking at along with associated companies?
Thank you
From previous answers, you have stated portfolio / sector allocations are a personal decision.
Currently I have approximately 20 % of my Canadian Equity Dividend (i.e. TSX dividend stocks) portfolio in the financial sector.
The financial sector holdings are divided into the following sub-category (industries) with representative stocks in each sub-category:
Asset Management – (BAM / BN)
Banks – (BMO / BMO / CM / RBC / TD)
Insurance (Life) – (GWO / MFC / SLF)
Insurance (P&C) – (DFY / FFH / IFC)
Questions:
1 – What would be appropriate percentages for each subcategory? An example would be should Banks be 50 % of the financial sector holdings (or 10 % of total equity holdings)?
2 – Is there any other sub-sector of the financial sector that I should be looking at along with associated companies?
Thank you
5i Research Answer:
This can be fairly subjective:
For a general investor looking for growth, we might consider the following as a guideline to work with: Real estate 5%, communications 5%, financials 10%, healthcare 5%, industrials 20%, technology 20%, consumer discretionary 10%, consumer staples 5%, materials 10%, energy 5%, utilities 5%. A more conservative investor could reduce both tech and industrial and add to utilities and consumer staples. An income-focused investor could add more to financials and reduce technology.
1) We would be okay with banks taking up 50% of the financial exposure.
2) We think the subsectors offer ample diversification. An option would be to consider a smaller or challenger bank to add further diversification. (such as EQB)