Why I Sold Mawer Balanced and Bought Stocks

I just hating paying on-going fees on a long term basis to own any asset. That's basically why I dumped all funds and ETFs I did own.

You get so seduced listening to all the financial porn out there in the mainstream that you think this is how you should invest. To be fair I bought MAW104 for my wife's LIRA.

Just in case something happened to me, I wanted something simple for her to manage. Then I had second thoughts when she told me that it didn't matter because when I'm gone she's selling everything and going to cash.

Ya, you got it. In other words she's going to drain her investment accounts in spite of my trying to educate her. The best I can then try to do is invest her money in individual dividend growth stocks so that would be harder for her to do.

Maybe she'll just learn to collect the dividends and live off that income. What I need to do is take care of myself well into old age so I can convert this plan into a monthly income stream through a RRIF.

MAW104

This is a Global Neutral Balanced Fund. It will cost you .92% of fees annually. Pretty cheap for a mutual fund. It gained -0.3% last year. It lost money but so did most everything. The TSX was down 8%. But isn't the whole reason you buy these products is to play conservative and not lose money. 40% is invested in bonds and fixed income. Isn't this supposed to protect us from down markets? Apparently that's a lie too.

There is no such thing. So, you pay a fee to then lose money and lose a whole year of not collecting dividends and raising cash. MAW104 distributes fractional units on a monthly basis, NOT cash. I hate that.

I didn't own this fund long but for those that do it's ranked 15/1373 funds in it's category.

Here are my results during my short 7 month hold.

BUY 2,024 shares @ $28.15

SELL 2,024 shares @ $28.33

PROFIT = $392.07 on an investment of $57,000

YAWN!

I decided to turn that cash into stock purchases for my wife's LIRA portfolio.

What I Bought Instead

BNS 95 shares

CNR 60 shares

CP 25 shares

CU 215 shares

EMA 150 shares

ENB 156 shares

FTS 150 shares

RY 70 shares

TD 90 shares

TRP 130 shares

Since the conversion the portfolio is up 11% and $7,850. Good decision? I think so. Including dividends which is building up in cash and NOT in fractional shares at 0.08 shares per month with MAW104.

So, the main differences are one fund to 10 stocks. Dividends instead of fractional shares. All equity instead of a balanced fund with a 60/40 split. No fees to 0.92 MER.

Where Would I be Today with Mawer

Let's just assume I didn't sell it and held on through the December massacre. The price today is;

@29.56 X 2,024 shares = $59,829

I would be up $2,829 on my original $57,000 investment IF I would have held on.

Where I am with an All Stock Portfolio

Up $5,262.52 on that $57,392 I converted into 10 stocks.

Cash in PF = $1,227

I'll wait for at least a $4K cash position before buying or adding stocks to the portfolio. In case you didn't know, you can't contribute to a LIRA.

The difference in the two approaches works out to;

$6,273 - $2,829 = $3,444

That's a big difference but to each his own.

I almost doubled my money since buying back stocks in November 2018.

In Sum

I don't subscribe to MPT anymore. I don't worry about asset allocation, diversification or when to rebalance. I buy stocks when they get cheap. Right now everything is expensive.

In Canada you have to own banks, utilities, pipelines and telecomms. All the big Funds/ETFs own them. So, why not just buy them individually and reap all the rewards while at the same time NOT pay fees.

Bonds are not safety. Neither are pref shares or any fund or ETF. They might bring you comfort but that all depends on your definition of comfort and safety. The real safety is in the long term holding of assets.

You don't sell your house every month or look and worry about it's price. Would you sell it if it dropped 20%. Never happen right? You hang on and the same attitude can be applied to stocks.

All my portfolios are built this way.

I hold some U.S. stocks in other portfolios that are great businesses.

Just what I do and not advice for you to do the same.

Do you subscribe to Modern Portfolio Theory? Do you own any mutual funds or ETFs for diversification and safety?