Investor Profile I am a 60 year-old...

Investor Profile

I am a 60 year-old married university teacher and part-time MD with five years to retirement. We have a house with no mortgage and a son who will finish university this year. Although we are generally invested for growth, we would like to become equal more aggressive.

Overall, your portfolio is set-up better than many I behold You have an asset mix and occupy securities in many different sectors and reasons of the world. My thinkings for change will be based forward a top down approach and fresh portfolio theory.

I have made a number of assumptions in reviewing this portfolio, for example, I considered the mutual stocks to be totally invested with no cash composing I considered the gold and partnerships as equity. I assumed the values given were in Canadian dollars and foreign assets were changeed to Canadian at reasonable exchange rates.

OBJECTIVES

You mention that you'd like to adopt a more aggressive stance; however, I would say the broad asset mix of your common portfolio is already quite aggressive. If you calculate upon that your income in retirement will befitting or exceed your living charges then you could focus your portfolio towards more growing rather than income. To blunder on the side of discretion you should try to preserve your stocks diversified among different industries.

RE-BALANCING YOUR PORTFOLIO

Cash

Your rife cash level is slightly reasonable If you are concerned about the stock markets being over-valued and the potential for a correction, then you might want to increase your cash to at least 10% or possibly 15% Also, to raise cash and realize gains, you might consider selling one of your U.S. mutual funds

Fixed Income

Your fixed income class could be increased by dint of another 5%. Your international exposing in this asset class is a little too high, on the other hand I am not too disquieted about that considering our forecasts for benign general reception fluctuations this year. The average name to maturity of the influences you hold is about 58 years which is not considered risky in a flat to decreasing interest rate environment. However, if the economy is picking up then the probability of higher rates increases. In that environment, you might want to realize capital gains and corrupt shorter-term bonds to reduce the risk of lower bondage prices. You might also consider selling the Province of Quebec bond

Equities

Your equity exposing is a little high and could be reduc by means of about 6%. Currently, the foreign composing of your equities is about one-third which might also be considered a little high. However, considering the recurs you have achieved with these holdings in the past, it is hard to argue with your succes Still, I would not remind of increasing your foreign content any further.

Your geographic diversification appear to bes to be fine. Mutual permanent funds are an excellent way to diversify for overseas investments. However, given the size of your portfolio, you should be able to create a North American portfolio of stocks without the use of mutual capitals Twenty-five to 30 different stocks in a small in number industries should do the job

Most portfolio managers have knowledge of to keep single stack weightings to les than 5% of a portfolio. Overall, your Bank of Montreal, Bombardier, BCE Royal Bank, and IPL holdings describe 44% of the stock portion of your portfolio. And individually, each of these issues portrays at least 7%; therefore, I think they should be sold down to about the 5% plain Further I would suggest that any positions representing les than 15% of the equities be sold or increased to that level

Once you have sold a certain overweighted holdings, you will be able to pervert with money [i]or[/i] gain more companies in the industrial production sector, which we like at this time. Here are more [i]or[/i] less names you could consider: Fluor, SNC Lavalin, Intel, and United Dominion. You might also examine into taking a position in a certain number of consumer stocks such as Seagrams, Cinram, Walgreen, and Abbott Laboratories. Your Stock Selection Guide can help you with the analysis.

WAYNE PROVOST IS A SENIOR PORTFOLIO MANAGER AT ROYAL TRUST

Copyright Canadian Shareowner Magazine Inc. May/Jun 1996

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