RM Portfolios Update: August 2017

Edited Photo. Source: Flickr - John Flannery

As promised after publishing my Dual Momentum post, I'm going to change the format of monthly portfolio updates. Each month I will share the monthly performance of the Balanced Portfolio and Dual Momentum Strategy.

Anyone who has been reading my blog for at least a few months should have the basic concept of how I balance purchases when running the RM Balanced Portfolio – a "lazy portfolio" strategy similar to the Canadian Couch Potato. Buy strategically to maintain each position as close as possible to your desired allocation. Learn about designing your own passive balanced portfolio.

The Dual Momentum strategy is very different. In this strategy, an investor holds 100% of their portfolio in one of three broad ETFs. Each month the holding is evaluated based on past performance criteria.

More often than not the holding stays the same so you simply buy more of that same ETF with your new contribution. However, about once per year on average it will change. You would then sell your entire position and buy the new ETF the strategy calls for.

This Month's Update

As my trend strategy indicated, the Canadian dollar climbed again in August. While nearly all of the other major indices did well in their own trading currency, once converted to Canadian dollars their performance often dropped a bit. I don't know if this will continue, but the path of least resistance is certainly up at this point.

Regardless of your recent performance, staying committed to your plan is the most important part of long-term success!

RM Balanced Portfolio

This month the Balanced Portfolio eeked out a small gain thanks to our gold allocation. Stay balanced with your new contributions and happy investing!

This is the monthly change of our four ETFs as of September 1.

  • XAW.TO down from $23.20 to $22.95 (-1.08%)
  • HXT.TO down from $30.79 to $30.74 (-0.16%)
  • HBB.TO up from $44.15 to $44.32 (+0.39%)
  • XGD.TO up from $12.19 to $13.03 (+6.89%)

Our overall portfolio was up slightly (+0.04%) this month. To remain balanced you should be purchasing XAW.TO with most of your new contributions.

Dual Momentum Strategy (RM Style)

It's important to give full credit to Gary Antonacci for this simple but effective investment strategy. Check out his site – Optimal Momentum – and read his book to learn all about this strategy before implementing it for your own portfolio.

I am confident that Dual Momentum is a great strategy that's likely to outperform a lazy portfolio strategy on a risk-adjusted basis. If you're afraid of big drawdowns, this strategy may be right for you. I recommend every investor give this strategy serious consideration.

We consider the past performance of just three eligible holdings: XUU.TO, XEF.TO, VSB.TO. The best performer based on specific criteria becomes the only holding for the next month.

Last month's recommendation XEF.TO went up 0.32% in August.

Current recommendation: XEF.TO (no change since last month)

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