For those of you just joining us, this is my portfolio that is leveraged with money borrowed from my home equity line of credit (HELOC). As the money borrowed is used to invest, the interest charged is tax deductible. For more details, check out my modified smith manoeuvre strategy.
There hasn’t been a lot of excitement in this portfolio over the past couple of months as I haven’t been buying much. The markets have bounced off their lows, but I’m unsure as to how long this will last. The predominant reader sentiment is that the markets will head lower soon and perhaps even retest March lows. As a result of the uncertainty, I have been mostly sitting on the sidelines waiting for the opportunity to use some of my investment cash.
What do I have my eye on? I’m mostly watching utilities right now as they seem to be unfavored but with attractive fairly dividend yields. In particular, besides what I already own, my watch list includes Enbridge (ENB), Canadian Utilities (CU), and Emera (EMA). As a matter of fact, my only transaction since the last update was a utility purchase. I’ve recently doubled my position of TransCanada Corp (TRP).
Financials (along with the whole market) have seemed to turn around with a vengeance since the March lows but they actually look like they are due for a small correction. Since my SM portfolio is heavy in financials, my portfolio has recovered a bit as a result.
In terms of selling, I haven’t done any in quite some time. However, I am tempted to sell Petro Canada (PCA) and my remaining position of Teck Comminco (TCK.B). Petro Canada is merging with Suncor who has a lower dividend payout, and TCK.B has cut their dividend but is making up for it with capital appreciation. Decisions decisions.
Here is my SM portfolio as of April 2009:
|Stock||Symbol||Shares||Avg Buy Price||Total||Div/Share||Yield|
|FTSE RAFI US 1500 Small-Mid ETF||PRFZ.US||20||$51.50||$1,029.99||$0.42||0.82%|
|AGF Management Limited||AGF.B.T||50||$22.71||$1,135.49||$1.00||4.40%|
|Bank of Montreal||BMO.T||25||$44.17||$1,104.24||$2.80||6.34%|
Total Portfolio Book Value: $51,220 (total invested from HELOC including after tax interest)
Portfolio Value (Cash + Equities): $44,589.29 (as of April 20, 2009)
Total Portfolio Cost Base of Equities (including commissions): $36,362.09
Portfolio Market Value of Equities (as of April 20, 2009): $29,121.70
Total Dividends / Year: $1,437.30
Portfolio Dividend Yield: 3.95%
Leveraged Investing Disclaimer: There have been a lot of readers who have mentioned that they are interested in a leveraged portfolio. Over the long term it may be lucrative. However, over the short term, equities are volatile and can put the portfolio deep in the red. My portfolio is a prime example of what can happen. If you can’t stomach losing 20-30% in the portfolio in any given year, then your risk tolerance isn’t suited for leveraged investing.
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