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The last day to contribute to RRSPs for the 2019 tax year is fast approaching, so this is a good time to review the my RRSP Portfolio, to provide some guidance on where to invest.

This model portfolio was launched eight years ago, in February 2012, in my Internet Wealth Builder newsletter. 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 a third of the portfolio is in bonds 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.

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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. 19.

PIMCO Monthly Income ETF (PMIF-T). This fund invests in a portfolio of global bonds and pays monthly distributions. It was added in February 2018 at $19.83. The unit value has moved higher in recent months, as interest rates have fallen. We received distributions of 44.8 cents a unit for the period, including a large December payment of over 20 cents.

iShares Canadian Universe Bond Index ETF (XBB-T). This ETF tracks the performance of the total Canadian bond universe including government and corporate issues. The fund edged up 13 cents since the last review plus we received distributions of $0.442 per unit.

iShares Canadian Corporate Bond Index ETF (XCB-T). This fund invests exclusively in corporate issues, as opposed to XBB, which covers the entire Canadian bond universe. It was added to the portfolio in February 2019. So far it has performed well, with a total one-year return of 8.2 per cent. That’s very good for a bond fund, but not sustainable.

iShares U.S. High Yield Bond Index ETF (CAD-Hedged) (XHY-T). This fund tracks the performance of the U.S. high-yield bond market. It was added to the portfolio in February 2019 and generated a total return of 8 per cent in the twelve months since.

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 as well. It was also added in February 2019 and is ahead 6.8 per cent since.

iShares Core U.S. Aggregate Bond ETF (AGG-A). This ETF aims to replicate the returns of the total U.S. bond market. It was added last August to give us more exposure to American bonds. The total return to date is a modest 2.3 per cent.

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First Asset Canadian REIT ETF (RIT-T). There are several good REIT ETFs available, but we chose this one in February 2019 because it has the broadest diversification. The timing was good – REITs have performed well in a falling interest rate environment and we have a total twelve-month return of 20.6 per cent.

iShares Edge MSCI Minimum Volatility USA Index ETF (CAD-Hedged) (XMS-T). XMS invests in low-beta U.S. stocks, such as Coca-Cola Co., Visa Inc., McDonalds Corp., and Verizon Communications Inc. Low beta means they are less sensitive to broad market movements and, therefore, less risky We added it to the portfolio last August and it is doing well so far with a six-month gain of 9.6 per cent.

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 was among the many new securities added in February 2019 and has done well so far with a one-year gain of 19.5 per cent.

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 was added to the portfolio a year ago. This ETF gained $2.30 in the latest six months and we received two distributions of 14 cents each.

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), mostly in North and South America. Renewable energy stocks continue to be in high demand and the unit price is up $26.34 since the last review. We received two distributions totaling US$1.03 per unit. The partnership announced a 5-per-cent distribution increase, effective with the next payment.

Brookfield Infrastructure Partners LP (BIP.UN-T). This limited partnership invests in infrastructure projects around the world. It has been the best performer in the portfolio for some time and gained $13.27 in the latest period. We received two distributions totaling US$1.005. The distribution will go up by 7 per cent effective with the next payment.

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Interest. We invested $1,673.76 in a high interest savings account. We received $23.43 for the period.

Here is how the RRSP Portfolio stood as of Feb. 19. Commissions have not been factored in and Canadian and U.S. currencies are treated at par for ease of tracking.

Gordon Pape's RRSP Portfolio (as of Feb. 19)

Weight %SharesAvg. priceBook valueCurrent priceMarket valueRetained income
PMIF-T7.2200$19.83$3,966.00$20.20$4,040.00$293.80
XBB-T5.290$32.35$2,911.11$32.47$2,922.30$125.19
XCB-T3.9100$21.04$2,104.00$22.12$2,212.00$63.60
XHY-T3.5100$18.96$1,896.00$19.43$1,943.00$104.30
CVD-T3.3100$18.16$1,816.00$18.57$1,857.00$83.30
AGG-A4.120$113.32$2,266.40$114.43$2,288.60$28.98
RIT-T5.3150$17.30$2,595.00$20.06$3,009.00$121.50
XMS-T16.3300$28.19$8,457.00$30.70$9,210.00$61.32
ZLB-T9.8150$31.43$4,714.50$36.72$5,508.00$126.00
ZLD-T4.8100$24.04$2,404.00$26.75$2,675.00$56.00
BEP-UN-T16.1120$30.62$3,673.82$75.65$9,078.00$191.90
BIP-UN-T19.7150$23.05$3,457.65$73.91$11,086.50$728.15
Cash0.8$421.02$444.45
Totals100$40,682.50$56,273.85$1,984.04
Inception$25,031.92

Comments: For the second six-month period in a row, every security in the portfolio showed a profit. The two Brookfield partnerships were the driving forces, with their unit prices jumping on announcements that both will create mirror-image Canadian corporations listed on the TSX, which will provide tax advantages to Canadians investing in non-registered accounts.

But while they were the main engines, the supporting cast held up well, pushing the portfolio to a six-month gain of 15.2 per cent.

In the eight years since this portfolio was launched, the average annual gain is 11.14 per cent. That continues to be well ahead of our target, which is to outperform GICs.

Changes: Why mess with success? Because the portfolio is becoming over-weighted to the two Brookfield partnerships, that’s why. They have been terrific investments for us, but together the now account for 35.8 per cent of the total assets. That makes me uncomfortable.

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So, we will sell 20 units of BEP.UN for a total price of $1,513. That will reduce our position to 100 units.

We will also sell 30 units of BIP.UN for $2,217.30, leaving us with 120 units.

That gives us $3,730.30 to re-invest. We will use the money to buy 60 shares of BCE at $65.07, for a total cost of $3,904.20. We will use $173.90 from cash to make up the difference.

We will also buy 10 more units of PMIF at $20.20 for a cost of $202. That will bring our total to 210 and reduce the retained earnings to $91.80.

The new cash balance (including retained income) is $2,052.59. We will invest this in a Renaissance High Interest Savings Account, which is RRSP eligible. The current rate is 1.6 per cent.

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

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Gordon Pape's RRSP Portfolio (revised Feb. 19)

Weight %SharesAvg. priceBook valueCurrent priceMarket valueRetained income
PMIF-T7.5210$19.85$4,168.00$20.20$4,242.00$91.80
XBB-T5.290$32.35$2,911.11$32.47$2,922.30$125.19
XCB-T3.9100$21.04$2,104.00$22.12$2,212.00$63.60
XHY-T3.4100$18.96$1,896.00$19.43$1,943.00$104.30
CVD-T3.3100$18.16$1,816.00$18.57$1,857.00$83.30
AGG-A4.120$113.32$2,266.40$114.43$2,288.60$28.98
RIT-T5.3150$17.30$2,595.00$20.06$3,009.00$121.50
XMS-T16.3300$28.19$8,457.00$30.70$9,210.00$61.32
ZLB-T9.8150$31.43$4,714.50$36.72$5,508.00$126.00
ZLD-T4.7100$24.04$2,404.00$26.75$2,675.00$56.00
BEP-UN-T13.4100$30.62$3,062.00$75.65$7,565.00$191.90
BIP-UN-T15.7120$23.05$2,766.00$73.91$8.869.20$728.15
BCE-T6.960$65.07$3,904.20$65.07$3,904.200
Cash0.5$270.55$270.55
Totals100$43,334.76$56,475.85$1,782.04
Inception$25,031.92

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

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