How’s my portfolio doing?

Question: I have my RRSP in a Russell Life Points Portfolio, namely Balanced Growth. This fund is 60 per cent equity and 40 per cent income. I’ve had it since February 2002. The personal rate of return since inception is 3.16 per cent. The management expense ratio (MER) is listed at 2.40 per cent.

As I just turned 58, I am wondering if:

1. I should be looking at a plan with less of an equity component?

2. Is the MER too high for this plan and rate of return? — R.S.

Gordon’s answer: Let’s start with the second question. Your MER is not excessive by industry standards. The average Canadian balanced fund has an MER of 2.55 per cent so your program is actually a little cheaper – as long as you are not paying a brokerage fee on top of the MER. However, it is not the least expensive balanced fund out there, by a long shot.

Also, your portfolio is underperforming. The average Canadian balanced fund gained 4.8 per cent annually over the three-year period ending Jan. 31. Your return is well below that.

You might want to give some thought to moving the money into a conservatively-managed balanced fund with a lower MER. Check out the ferings from companies like Saxon, Beutel Goodman, McLean Budden, and the banks for possibilities.

As for the equity/income split, at your stage in life I would be looking something closer to 50/50, assuming you don’t plan to retire until at least 65. If you are thinking of stopping work sooner, reduce the equity portion accordingly.

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