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Ideally, your strategy should be never to lose money in your RRSP. But unless you want to keep it all in cash and GICs, there are risks that must be accepted. In a bad year like 2022, even the most conservative RRSP portfolios lost ground. Not only did stock markets tank but the bond market, which was a safe haven for decades, delivered its worst results since the early 1980s.

In times such as these, the goal is to minimize losses and put the portfolio in a position to recover quickly. I believe our RRSP portfolio did that. Over the one-year period from February 2022 to this month, the portfolio fell 5.1 per cent. No one likes losing ground, but that was a decent performance in the circumstances.

Our RRSP Portfolio was launched in February 2012. It has two main objectives: to preserve capital and to earn a higher rate of return than you could get from a GIC. The original value was $25,031.92.

About 30 per cent of the portfolio is in bonds, preferred shares, and cash. The balance is in growth-oriented assets that offer exposure to the Canadian, U.S., and international equity markets. The portfolio contains a mix of ETFs, stocks, and limited partnerships so readers who wish to replicate it must have a self-directed RRSP with a brokerage firm.

These are the securities currently in the portfolio with comments on how they have performed since the last review in August. Results are as of the afternoon of Feb. 9

iShares 0-5 Years TIPS Bond Index ETF (XSTP-T). This ETF invests in short-term U.S. Government inflation protected notes. They pay a low rate of return, but both the face value and the interest increase as inflation rises. This provides downside portfolio protection. The units are up 33 cents since the last review in August. We received distributions that totaled 95.6 cents per unit. Note that while distributions are monthly, they vary considerably and some months the payout is zero.

iShares Canadian Universe Bond Index ETF (XBB-T). This ETF tracks the performance of the total Canadian bond universe including government and corporate issues. Bonds are finally starting to rally after being crushed last year by rising interest rates. The units are down 60 cents since the last review but they have recovered from their 52-week low of $26.21. We received distributions of 31.1 cents per unit.

iShares Convertible Bond Index ETF (CVD-T). This fund invests in bonds that can be converted into common stocks under certain conditions. It offers a play on the stock market while providing cash flow. The units lost 13 cents in the latest period. That was more than offset by distributions of 42.5 cents per unit.

iShares S&P/TSX Canadian Preferred Share Index ETF (CPD-T). This ETF invests in a portfolio of preferred shares, mostly rate reset issues. These should tend to rise as interest rates move higher, but we didn’t see that in 2022 as the units dropped 18.4 per cent. They’ve recovered some ground this year with an advance of 8.1 per cent as of Feb. 8. Distributions totaled 30.6 cents per unit.

BMO S&P/TSX Banks Equal Weight Index ETF (ZEB-T). This ETF invests in shares of the Big Six Canadian banks. Banking stocks normally fare well in a rising interest rate environment, but recession fears weighed heavily on prices last year. The good news is we’re starting to see a recovery. The units are up $1.27 since the last review. Monthly distributions totaled 74 cents.

iShares Edge MSCI Minimum Volatility USA Index ETF (CAD-Hedged) (XMS-T). XMS invests in low-beta US stocks such as T-Mobile, Cisco Systems, Johnson & Johnson, and PepsiCo. Low beta means they are less sensitive to broad market movements and, in theory, less risky. The fund posted a loss of $1.23 in the latest six months. Quarterly distributions totaled 19.6 cents per unit.

BMO Low Volatility Canadian Equity ETF (ZLB-T). This ETF invests in a portfolio of large-cap Canadian stocks that have a low beta history. It’s up 88 cents since the last review, and well ahead since it was added to the portfolio. We received two quarterly distributions for a total of 53 cents.

BMO Low Volatility International Equity Hedged to Canadian Dollar ETF (ZLD-T). This ETF focuses on international stocks and is hedged to Canadian dollars, so the currency risk is removed. It lost a modest 4 cents in the latest period. Distributions totaled 32 cents per unit.

Brookfield Renewable Energy Partners LP (BEP.UN-T). This Bermuda-based limited partnership owns a range of renewable power installations (mainly hydroelectric but also some wind and solar). Green energy stocks have gone through a prolonged slump and these units lost a gut-wrenching $14.57 in the latest period. We received two distributions for a total of 64 US cents

Brookfield Infrastructure Partners LP (BIP.UN-T). This limited partnership invests in infrastructure projects around the world. It’s the biggest winner in the portfolio but has been trending down and lost $6.79 in the latest period. We received two distributions totaling 72 US cents.

Fortis Inc. (FTS-T). Interest-sensitive stocks were hit hard by the rapid rise in interest rates last year and Fortis did not escape. The shares were down $6.73 in the latest six months. Don’t be concerned; this is a sound utility, and the stock will recover. We received two dividends for a total of $1.10 per share.

BCE Inc. (BCE-T). BCE was also driven lower by the rapid interest rate hikes. The stock is down $4.18 since the last review but, here again, don’t worry. BCE will be making profits for as long as any of us are alive. We received two quarterly dividends of 92 cents each.

Interest. We invested $2,606.77 in Duca Credit Union, which was offering a special promotion rate of 3.25 per cent. We received $42.36 in interest.

Here is how the RRSP Portfolio stood as of Feb. 9. Commissions have not been factored in. Canadian and U.S. currencies are treated at par but only come into play in the distributions from the two Brookfield funds.

IWB RRSP Portfolio (as of Feb. 9)

Weight %SharesAverage PriceBook ValueCurrent PriceMarket ValueRetained IncomeGain/Loss %
XSTP-T8.8130$40.00 $5,200.00 $39.73 $5,164.90 $281.58 4.7
XBB-T10210$32.82 $6,892.21 $27.80 $5,838.00 $269.89 -11.4
CVD-T3.2110$18.20 $2,002.50 $17.25 $1,897.50 $159.53 2.7
CPD-T5.6280$13.86 $3,880.80 $11.67 $3,267.60 $167.44 -11.5
ZEB-T10.7170$42.46 $7,218.20 $36.98 $6,286.60 $248.20 -9.5
XMS-T7.8150$28.19 $4,228.50 $30.64 $4,596.00 $297.90 15.7
ZLB-T11.2160$31.97 $5,114.80 $40.91 $6,545.60 $101.68 30
ZLD-T4.2100$24.04 $2,404.00 $24.53 $2,453.00 $240.00 12
BEP-UN-T10.1160$21.08 $3,373.56 $36.98 $5,916.80 $307.26 84.5
BIP-UN-T14.8190$19.18 $3,643.48 $45.59 $8.662.10$191.39 143
FTS6.470$57.67 $4,050.90 $53.62 $3,753.40 $224.70 -2
BCE6.260$65.07 $3,904.20 $60.65 $3,639.00 $525.72 6.7
Cash1$535.78 $578.14
Totals100$52,448.93 $58,598.64 $3,015.29 17.5
Inception$25,031.92 146.1

Comments: Everything was down last year. Our RRSP Portfolio didn’t escape. We managed a small gain in the first part of the year but lost 5.3 per cent in the latest six-month period. For the 12 months, we were down 5.1 per cent.

The biggest losers were the two Brookfield limited partnerships, and that hurt even more because they are our two largest holdings. We will address that in a moment.

Over the eleven years since the portfolio was launched, we have a total return of 146.1 per cent. That’s an average annual growth rate of 8.53 per cent. That’s down over the past year but still well above target. There are no 8-per-cent GICs around.

Changes: We will sell our positions in BEP.UN and BIP.UN for a total (including retained earnings) of $15,077.55.

We will use $9,886 to buy 200 shares of Brookfield Corp. (BN-T) at $49.43. This move allows us to retain some exposure to the company’s infrastructure and energy assets (Brookfield is a major shareholder in the two partnerships) while allowing us to participate in other aspects of the business such as real estate, asset management, and insurance. In short, we are trading for more diversity and stability.

We will also buy 100 shares of Enbridge Inc. (ENB-T) at $52.90 for a total expense of $5,290. This provides some exposure to the booming energy industry as well as giving us a nice yield of 6.7 per cent. We’re short $98.45, which we’ll take from cash.

We will use retained earnings to add to these positions:

XBB – We will purchase another 10 units for a cost of $278. That will give us 220 units and reduce the cash balance to zero. We are short $8.11, which we will take from cash.

ZLD – We’ll buy another 10 units for $24.53, for a cost of $245.30. We now have 110 units with no retained earnings. We’ll take $5.30 from cash to make up the difference.

The new cash balance (including retained income) is $2,473.03. We will keep it at Duca Credit Union, which is offering 4.25 per cent now. That increases to 4.75 per cent after April 30.

Here is the revised portfolio. I’ll review it again in August.

IWB RRSP Portfolio (revised Feb. 9)

SecurityWeight %SharesAverage PriceBook ValueCurrent PriceMarket ValueRetained Income
XSTP-T8.7130$40.00 $5,200.00 $39.73 $5,164.90 $281.58
XBB-T10.3220$32.82 $7,170.21 $27.80 $6,116.00 $0
CVD-T3.2110$18.20 $2,002.50 $17.25 $1,897.50 $159.53
CPD-T5.5280$13.86 $3,880.80 $11.67 $3,267.60 $167.44
ZEB-T10.5170$42.46 $7,218.20 $36.98 $6,286.60 $248.20
XMS-T7.7150$28.19 $4,228.50 $30.64 $4,596.00 $297.90
ZLB-T11160$31.97 $5,114.80 $40.91 $6,545.60 $101.68
ZLD-T4.5110$24.08 $2,649.30 $24.53 $2,698.30 $0
BN-T16.6200$49.53 $9,886.00 $49.53 $9,886.00 $0
ENB-T8.9100$52.90 $5,290.00 $52.90 $5,290.00 $0
FTS-T6.370$57.67 $4,050.90 $53.62 $3,753.40 $224.70
BCE-T6.160$65.07 $3,904.20 $60.65 $3,639.00 $525.72
Cash0.7$466.28 $466.28
Totals100$61,061.59 $59,607.18 $2,006.75

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to