In my struggle to bring my fixed income asset allocation in line to my target allocation, I did some buying in May. It was not a huge transaction, but essentially it took me from only 10% fixed income to a whopping 12.4% fixed income. As I wrote about a month ago, I had been focused on buying equities with the market down from October to January and the fixed income got away from me.
The security I purchased was one I already held in my portfolio – the iShares CDN Short Bond Index Fund (XSB). This fixed income fund has a nice low MER of 0.25 and an average weighted term of 2.93 years. I have chosen to go short in my portfolio due to research and analysis from William Bernstein that shows that there is similar returns for much less risk. As I am not looking for the bond portion of my portfolio to generate huge returns, I went very conservative in order to balance the volatility of my portfolio while letting the equities provide me with the growth.
That being said, I am still too light when it comes to fixed income and will still be putting additional funds into fixed income assets. I want to have 36% of my portfolio in fixed income and will not stop until I am done!