On Wednesday of this week I did some buying within my portfolio in order to better meet my asset allocation targets (Enhancing My Asset Allocation). Four transactions were completed, each one with a very specific purpose and objective in mind.
Transaction #1: Sell Employer Stock Purchase Plan Shares
The purpose behind this trade was to reduce my Canadian equity allocation. After this trade the Canadian component is still high by about 8%, however I am more comfortable now than I was. Remember, as one of my principles states I want to achieve full diversification to reduce the overall risk in my portfolio.
The timing of this trade worked out well as my employer shares have seen a nice rise recently. I would have done the transaction regardless as I continually buy shares monthly and these shares can quickly make up too a lerge percentage of my portfolio. The money from this sale was quickly reallocated into other assets.
Transaction #2: Buy Emerging Markets Index Fund
My current global asset holdings include 2 index funds. The first is a segregated fund that I buy as part of my pension plan. The nice thing is it is an index fund and has done well in tracking the EAFE index. I also hold an iShares MSCI International Index Fund. Both these funds are primarily focused on large companies in well-established countries. What these funds don’t cover as well is the emerging market sector of the market. I have set a target of 5% for this asset and this trade takes me closer to that target.
I chose to purchase an index fund for this asset class as I am not going to attempt to select individual securities in these emerging markets. The fund I chose was the Vanguard Emerging Markets ETF. The suggestion to use this fund originally came from SoundInvesting.com and after further research I decided this was a good fund for me. More details on this fund will come later.
Transaction #3: Buy US REIT Index Fund
The second buy I completed was to expand my REIT holdings to further than just Canadian REITs. I currently hold a Canadian REIT index through iShares. This trade will expand this asset class within my portfolio and further reduce the overall risk and will provide additional yield to my portfolio which wll up the income my portfolio throws off.
The fund I chose was theVanguard REIT ETF – again, I will explain this fund more in a future post. It has a good track record and low fees.
Transaction #4: Buy Russell Microcap Index Fund
The last transaction I completed was to further diversify my small-cap holdings by adding a small amount (1%) of a microcap ETF to the mix. The fund I chose was iShares Russell Microcap Index Fund. It tracks an the Russell Microcap Index which tracks the performance of companies in the $50 million to $550 million range. My objective for this fund is to further diversify my small-cap holdings outside of the S&P 600 index that I currently hold. More details on this microcap fund will be coming soon.
That was a busy week from a transaction perspective. In a future post I am going to describe these funds in more detail. Please ensure you subscribe to my feed to get these updates when I make them.Google+