Another take on the Permanent Portfolio for Canadians
Posted: Mon Jun 18, 2018 1:42 pm
Hello everyone.
Yep, it's me again with another approach to implementing the Permanent Portfolio for Canadians.
I've started a few threads in the past on this topic, and I've advocated several different possible allocations that I think should work reasonably well. However, in the past couple of days it occurs to me that Canadian investors have another approach that I think is worthy of consideration.
Simply use currency hedging to build a Permanent Portfolio that will deliver to Canadians exactly the return that U.S. investors receive.
The U.S., given it's size and position in the global economy, is pretty much the only country in the world in which I'd be willing to accept single country risk for the whole portfolio. The cost of currency hedging between the CAD and USD is next to nothing, so the process should be quite transparent and painless.
Here's a potential model portfolio for Canadians that allows us to invest in a U.S. Permanent Portfolio with no currency risk.
25% stocks - VUS - Vanguard Total U.S. Market (CAD hedged)
25% long-term bonds - ZTL - BMO U.S. Treasury Long-Term Bond Fund (CAD hedged)
25% short-term bonds - ZTS - BMO U.S. Treasury Short-Term Bond Fund (CAD hedged)
25% gold - CGL - Gold (Returns the same to Canadian investors that GLD would return to American investors with hedging)
This portfolio should deliver to Canadians the same return that U.S. investors receive from the PP. Given the choice between investing in a Canada-only PP and this PP, I would personally probably choose this one. Just another option to consider! I welcome anyone's constructive feedback or comments!
Yep, it's me again with another approach to implementing the Permanent Portfolio for Canadians.
I've started a few threads in the past on this topic, and I've advocated several different possible allocations that I think should work reasonably well. However, in the past couple of days it occurs to me that Canadian investors have another approach that I think is worthy of consideration.
Simply use currency hedging to build a Permanent Portfolio that will deliver to Canadians exactly the return that U.S. investors receive.
The U.S., given it's size and position in the global economy, is pretty much the only country in the world in which I'd be willing to accept single country risk for the whole portfolio. The cost of currency hedging between the CAD and USD is next to nothing, so the process should be quite transparent and painless.
Here's a potential model portfolio for Canadians that allows us to invest in a U.S. Permanent Portfolio with no currency risk.
25% stocks - VUS - Vanguard Total U.S. Market (CAD hedged)
25% long-term bonds - ZTL - BMO U.S. Treasury Long-Term Bond Fund (CAD hedged)
25% short-term bonds - ZTS - BMO U.S. Treasury Short-Term Bond Fund (CAD hedged)
25% gold - CGL - Gold (Returns the same to Canadian investors that GLD would return to American investors with hedging)
This portfolio should deliver to Canadians the same return that U.S. investors receive from the PP. Given the choice between investing in a Canada-only PP and this PP, I would personally probably choose this one. Just another option to consider! I welcome anyone's constructive feedback or comments!
