The Dividend Guy Asset Allocation
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I keep track of my asset allocation on a regular basis. The way I do this is to have a goal allocation that I want to have within my overall portfolio and then compare that to my actual portfolio. Upon analysis of my allocation, there are some areas that I need to focus on. Before I speak about them, have a look at my goal and actual asset allocations.
Unless you have amazing eyesight, click the graphs to make them bigger
You will see that I am overweight in one particular area – Canadian Equities. This is in large part to how well my holding in RBC Royal Bank has done over that past few years. Add that to the fact that I contribute money every month to a Canadian pension fund. To help with this overweighting, I have readjusted the amount I contribute to the Canadian portion. I will be contributing less to the Canadian assets and more to the International side.
I have also decided that I want to add some smaller company exposure to my account. All my equity exposure is in huge market cap companies. There is nothing wrong with this as it is a huge focus for me as you know – companies that pay good dividends that most importantly increase their dividend payments year in and year out. However, to be a prudent investor I also believe that you shouldn’t put all your eggs in one asset basket.
You may remember that I have also indicated that I need to spread around my exposure to other industries. This is still a focus for me as well, and I may be able to do it somewhat through some small-cap stocks. However, as I need to add more money to the large-cap equity (i.e. dividend stocks) side, I will be looking at other industries to look invest in.
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5 Comments on this post
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investor said:
I came across your blog yesterday, its your blog which inspired me to create mine. I like you website, specially the goals you have set and rules yoru are following.
thanks for the good work.
February 10th, 2007 at 10:51 pm -
investor said:
you mentioned you are looking to get into small caps stock, check out the list I have I have few small caps, might give you some ideas.
February 11th, 2007 at 3:11 pm -
Middle Class Millionaire said:
Hi Dividend Guy I like the blog but I’m just wondering about the reasoning behind your goal asset allocation considering your ultimate investment goal is to achieve a “Passive Income Through Dividend Investingâ€. More specifically, I was wondering how having 20% of your portfolio in small caps and 45% of your equities outside of Canada will affect your goal considering most small caps don’t pay a dividend and the non-Canadian equities will not receive the dividend tax credit. It seems that this target asset allocation would result in only 35% of your portfolio in Canadian investments that generate “passive income”.
Keep up the good work on the blog.
February 15th, 2007 at 5:24 pm -
The Dividend Guy said:
MCM,
That is a great question and one that I have batted around for some time. The way I look at it more from a diversification perspective. I need to ensure that I try to maximize gains in my portfolio in a risk effective manner. Adding some small-cap exposure gives me access to more gains which I can then plow back into dividend stocks, while reducing my overall portfolio risk.
TDG
February 15th, 2007 at 5:53 pm -
RTMD said:
This is an good point MCM, however this stock market is big and you can find good small cap stocks paying good dividend. Their was article published recently by Fools about the comparsion of returns between large dividend stock vs small cap dividend stock vs small cap non divided stock for a long period of time and guess what, small caps with dividend were gaining the most. I will try to find the link and post it on my blog
http://ridetomilliondollars.blogspot.com/
meanwhile what do you guys think of RET – (small to mid cap ), pays close to 3% dividend. and EFH small cap gem and pays close to 1.5 percent dividend.
February 16th, 2007 at 7:04 am
