Dan Bortolotti, 40
Occupation: Freelance journalist, living in Aurora, Ont.
Portfolio: A diversified basket of exchange-traded funds (ETFs): Vanguard U.S. Total Stock Market (15 per cent), Vanguard U.S. Small Cap Value (10 per cent), iShares Canadian Composite Index (10 per cent), iShares Canadian Value Index (5 per cent), iShares Canadian REIT Sector Index (10 per cent), Vanguard Europe Pacific (15 per cent), Vanguard Emerging Markets (5 per cent), Claymore Laddered Corporate Bond (15 per cent) and Claymore Laddered Government Bond (15 per cent).
The perks of being a journalist
“Being a journalist has spinoff benefits,” Dan Bortolotti notes. “Over the years, I've managed to amass a modest library of free books. I've snagged trips to exotic locations – some of them with land mines. Once I even got a free rectal exam while doing a story on health clinics.”
One of the best perks came last year when he spent some time researching Couch Potato portfolios for MoneySense Magazine. This triggered a switch to the passive-investing approach, which uses low-cost index funds and ETFs to construct diversified portfolios.
His investment strategy
“I'm a fervent believer in buy-and-hold index investing,” Mr. Bortolotti says. “I have no faith in my ability to time the market or pick stocks.” Accordingly, his portfolio is entirely made up of index funds and ETFs.
“My current portfolio has a weighted management expense ratio (MER) of 0.23 per cent – that's less than one-tenth what I was paying before,” he declares. “Over the next 20 years, I figure it will save me tens of thousands of dollars.”
His asset allocation
Nearly half of his assets are allocated to U.S. and international equities. Canada represents just 3 per cent of the world stock market. And more than half of the S&P/TSX composite index is weighted toward financials, energy and materials.
The Vanguard U.S. Total Stock Market ETF “holds almost 3,400 stocks with lots of exposure to technology, health care and consumer goods, all of which are lacking in the Canadian market.” The Vanguard Europe Pacific ETF “holds almost 1,000 companies.”
His other asset allocation decisions include:
- 30 per cent to bond ETFs because he has “a moderate stomach for a risk”;
- equity portion tilted toward small-capitalization and value stocks “since they should provide better returns than the broad market over the long term”;
- 10 per cent assigned to real estate investment trusts (REITs) because real estate adds diversification and “the dividends are typically outstanding.”
Best move
“My best move was not panicking during the market crash. … In fact, I rebalanced back to my target allocation by buying more stocks in February.”
Worst move
“I agonized too much about the perfect asset allocation and about which specific ETFs to buy. … As a result, I wasted a couple of hundred bucks on trades before finally settling on the above portfolio.”
Advice
“I think more people should pay attention to their investment costs.”
Special to The Globe and Mail
Want to share your strategies? E-mail mccolumn@yahoo.com
