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. I write an update every couple months or so to show new positions added along with any market gains/losses. For more details, check out my modified smith manoeuvre strategy.
In the last update, I expected a pull back soon after the post, however, that hasn’t materialized yet. I still expect some sort of correction at which time I will be deploying more capital. Even without the pullback, there were some equities that were selling near their 52 week lows, like utilities. Having said that, I initiated a position with Canadian Utilities (CU), TransAlta (TA) in addition to adding to my Fortis (FTS) position. Not only did I buy a few utilities, I initiated my position in Enbridge (ENB) and First Capital Realty (FCR) – a REIT dressed as a corporation.
I usually don’t sell within this portfolio as I would like to keep the dividend stream going for as long as possible. However, there are times when companies change or get bought out. In this case, I sold off my position in Petro Canada (PCA). The reason being is that Suncor is in the process of merging with Petro Canada which will most likely result in a reduced dividend. In addition, I already own Suncor within my RRSP.
The Portfolio as of June 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%|
|First Capital Realty||FCR.T||100||$15.75||$1,574.99||$1.28||8.13%|
- Total Portfolio Book Value: $52,235 (total invested from HELOC including after tax interest)
- Portfolio Value (Cash + Equities): $49,196.60
- Total Cost Base of Equities (inc. fees): $41,970.95
- Market Value of Equities (June 16, 2009): $39,125
- Total Dividends / Year: $1,765.50
- Portfolio Dividend Yield: 4.21%
Sector Allocation (based on market value)
- Financials: 51.79%
- Utilities: 16.79%
- Energy: 20.00%
- Resources: 4.96%
- Real Estate: 4.52%
- Other: 1.95%
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.