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Globe and Mail Profile: Me and My Money


Globe and Mail Profile: Me & My Money

An active fan of passive investing

by: LARRY MacDONALD

From Saturday’s Globe and Mail

Published 2011-04-29 18:24 Friday, Apr. 29, 2011

Doug Cronk CFA is Manager, Investments for a Canadian Pension Plan

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7 Comments Post a comment
  1. diversifyme #

    Hi Doug,

    Great blog. Really appreciate your insight on this whole subject and suspect the vast majority of individual investors (especially novices such as myself) will as well.

    My question: In light of the steady decline in interest rates over the past 20 years, and the “tailwind” effect you’ve noted that this has provided to stocks and bonds, just wondering if in your view the 60/40 asset allocation model still holds as the best default for an average investor, or if that allocation should be tweaked in some way to reflect lower expected future returns? For example, is something like a high yield bond ETF worthwhile to consider?

    Thanks,
    Sean G.

    Like

    May 5, 2011
    • It’s a really good point you bring up. Whether you add Hi Yield (or some other satellite) for a bit of octane to compliment the core (60/40) … has marginal impact as compared to the ‘Big Dog’ … asset allocation. I’m pro ‘active management of passive investments’ … might work. Might not. But protect your core. Keep you Hi yield satellite to 5% … 10% at most … and your core will still survive no matter what.
      Good luck!

      Like

      May 6, 2011
  2. Theodor Weideman #

    It was great to read your article in Saturday’s Globe, Doug – very interesting to me. I look forward to reading your blog archives – thanks for sharing your expertise.

    Theo.

    Like

    May 4, 2011
    • Thanks. It’s alwasy good to learn that it means something.

      Like

      May 5, 2011
  3. Jesse Tallon #

    Hi Doug,

    I read your article on Globeinvestor and thought it was excellent. In the portfolio section you have a list of some ETFs and I noticed you are by trade involved with asset allocation.

    Would you mind lending some insight towards how you usually like to have the equities / bonds that you mentioned allocated?

    Thanks for your time and insights

    Jesse

    Like

    May 4, 2011
    • Hi, Jesse.
      Look to the PIAC web site at: http://www.piacweb.org/publications/index.html
      the grid at the bottom shows the average asset allocation for all Pension Plans in Canada (130 pension funds that manage total assets in excess of $909 billion).
      ‘Your’ portfolio doesn’t have to be exactly like that … but if it ‘resembles’ the average pension plan … you are way ahead.
      Also see my Sept 17/2010 blog post https://dougcronk.wordpress.com/2010/09/17/why-6040-asset-mix/
      If these don’t guide you then … start at 50/50 and move away from there as you feel more and more comfort.
      Good luck.

      Like

      May 4, 2011
      • Jesse #

        Thank you very much!

        Like

        May 4, 2011

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