Interesting Stuff on the Web Volume 26

 

Interesting stuff on the web is what I have read through out the week. I read a lot of articles and there is always a few that I feel is worth you reading. Often I have a different opinion than the articles I post on Interesting Stuff On The Web but they are all well written pieces. Here are the links. Enjoy !!

 

There are 10 reasons why the market has been so volatile/David Rosenberg “Wild market swings like Monday’s late-day reversal are becoming commonplace for a stock market that just last year enjoyed an extended period of remarkable calm.”

Why Gold Is a Bad Investment/Mustard Seed Money “The other day, a Twitter troll was trying to convince me that I was making a mistake by investing in the stock market. He claimed that he was a superior investor because he invested in gold.”

JP Morgan sounds alarm over US economic data that could signal recession / Ambrose Evans-Pritchard The US credit markets are flashing a rare warning of economic trouble ahead, signaling that the Federal Reserve risks blundering into another recession without a deft change of course.

Why I’m still planning to live off dividends and distributions/ My Own AdvisorSome time ago…yours truly wrote a controversial post about the intent to live off dividends and distributions form our portfolio. I know some investors don’t agree with my approach and I can see why.”

 

 

 

Don’t wait for retirement to enjoy life !!

How does one of the top 10 pension funds diversify their assets ?

Canadian Pension Plan

The Canadian-Pension-Plan is in the top 10 largest pension funds in the world. All individuals over the age of 18 who work inside of Canada are eligible to contribute toward and receive benefits from the Canadian Pension Plan (CPP). In 2019 there are changes coming to the CPP to gradually enhance the pension  Canada Pension Plan enhancement.

CPP Asset Allocation

Being one of the worlds largest funds, it’s sole mandate is to invest the assets of the CPP Fund with a view to achieving a maximum rate of return without undue risk of loss. This distinguishes CPP from a sovereign wealth fund that are swayed by political agendas.

The CPP has 320 billion in assets and according to the Chief Actuary forward looking numbers it is sustainable for a 75 year period and that is estimating inflation at 3.9%.

Source: CPP performance

The CPP asset allocation As of March 31, 2017.

Fund Size: $316.7B Asset Mix:

55.4% Equity; 21.5% Fixed Income; 23.1% Real Assets

Canadian Equity: 3.3%
US/EAFE Equity: 27.9%
Emerging  Equity: 5.7%
Private Equity: 18.5%
Fixed/Plus/Global Bonds/Mortgages/Credit: 21.5%
Real Estate: 12.6%

 

Rate of return

1 year (2017) 11.8%
5 year 11.8%
10 year 6.7%

 

Final Thoughts

Notice Canadian equity is 3.3%. In my opinion this is acceptably considering Canadian stock market cap is only 2,360 bn.
Most Canadian investors have a home bias and if you live, work, bank, invest, own a business, and hold your assets  in just one country , you are putting all of your eggs in one basket.

As a Canadian for your own long-term portfolio you might want to consider a similar asset allocation. After all, these funds are faced with the pressure of providing millions of people with a secure retirement now and decades into the future.

 

Don’t wait for retirement to enjoy life !!