Q&A With Gordon Pape: Diversifying Your Portfolio

Gordon Pape provides a reader with a few suggestions to diversify his his portfolio.

Q – I’m 57, self-employed. I want to work for as many years as possible (you are my role model in this regard). My RRSP (about $180,000) and RESP for my eight-year-old daughter (about $16,000) are currently both invested in the Mawer Balanced Fund.

I’m generally happy with it but understand that it’s probably not right to be in only one fund with this amount of money, and I want to potentially do better than that fund. Which of your recommended portfolios is the best fit for me providing I don’t draw from the RRSP and RESP for the next 10 years? – A.B.

A – The Mawer Fund has an outstanding record – it has outperformed the peer group over all time periods out to 20 years. There are not many funds that can say that.

That said, I understand you would like some diversification. Here are my suggestions.

First, leave your daughter’s RESP alone. A balanced fund is a good choice for education plans. As she approaches college age, say around 14-15, start shifting some money into a fixed income fund to reduce risk. The Mawer Bond Fund would work fine.

For your own investments, you may wish to put more money into the U.S. market. The Mawer Balanced Fund has only 19 per cent of its assets there. You might want to move some money into the company’s U.S. Equity Fund. For more diversification, consider adding the Mawer Emerging Markets Fund and the Mawer International Equity Fund as well.

If you wanted to track one of my portfolios, the RRSP Portfolio would be my suggestion, based on your age and priorities. But that would mean revamping your whole portfolio. By adding a couple of extra Mawer funds you can get more diversification at no expense, since you are transferring assets within an RRSP. – G.P.


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