Q: Hello,
My question is portfolio construction strategies for a RIF. Assume the value allows for sufficient diversification to total 20 positions, as long as a max 5% (say $5,000.00 per investment) weighting is respected in each. Also assume one wants foreign exposure and uses ETFs for that portion with a goal of maintain a minimum 25% (say 5 positions) exposure.
Based on the above, that would mean +/- 15 individual CAD stocks can be purchased. I like the fact individual stocks can provide greater returns and outperform the index and/or its sector. But they can also produce far more portfolio carnage for a variety of reasons? Capital preservation is an important consideration but low volatility is acceptable. Other investments can be drawn on to avoid selling in a market downturn and I am still a few years away from reaching 71. I am assuming the value of the portfolio is stable and the strategy would change if the withdrawals started reducing the portfolio value below an amount where a reasonable diversification could be maintained. I believe it is a useful exercise to have an objective yearend review. It helps to understands risks and plan/structure investments going forward with a vision.
In your opinion, what factors might be prime considerations to simply move the funds entirely into ETFs?
Given some recent questions, I would like your insight into FOREX and Covered Call options on ETFs for my foreign exposure. Other than travel, our living expenses are CAD. Consider foreign bank ETFs ZUB and ZBK as a good example since you have provided responses on them . Would buying a block of each which add up to my desired individual investment weight also give some FOREX exposure but a defensive position thanks to the hedge? Similarly, would a strategy of picking two ETFs one with a covered call and the other full market exposure increase capital appreciation potential while enhancing monthly returns?
Thank you for your insights. Season's greetings!
Mike
My question is portfolio construction strategies for a RIF. Assume the value allows for sufficient diversification to total 20 positions, as long as a max 5% (say $5,000.00 per investment) weighting is respected in each. Also assume one wants foreign exposure and uses ETFs for that portion with a goal of maintain a minimum 25% (say 5 positions) exposure.
Based on the above, that would mean +/- 15 individual CAD stocks can be purchased. I like the fact individual stocks can provide greater returns and outperform the index and/or its sector. But they can also produce far more portfolio carnage for a variety of reasons? Capital preservation is an important consideration but low volatility is acceptable. Other investments can be drawn on to avoid selling in a market downturn and I am still a few years away from reaching 71. I am assuming the value of the portfolio is stable and the strategy would change if the withdrawals started reducing the portfolio value below an amount where a reasonable diversification could be maintained. I believe it is a useful exercise to have an objective yearend review. It helps to understands risks and plan/structure investments going forward with a vision.
In your opinion, what factors might be prime considerations to simply move the funds entirely into ETFs?
Given some recent questions, I would like your insight into FOREX and Covered Call options on ETFs for my foreign exposure. Other than travel, our living expenses are CAD. Consider foreign bank ETFs ZUB and ZBK as a good example since you have provided responses on them . Would buying a block of each which add up to my desired individual investment weight also give some FOREX exposure but a defensive position thanks to the hedge? Similarly, would a strategy of picking two ETFs one with a covered call and the other full market exposure increase capital appreciation potential while enhancing monthly returns?
Thank you for your insights. Season's greetings!
Mike
