Many people in the investment industry promote asset allocation funds as a simple and profitable way to assemble a diversified portfolio of stocks, bonds and cash equivalents.

But as is so often the case, the product rarely lives up to the hype.

How asset allocation funds actually work

Asset allocation funds are mutual funds that can shift their portfolio allocations between stocks, …read more »

ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $19.60 (Toronto symbol XDV; buy or sell through a broker; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. Its yield is 2.7%.

The fund’s …read more »

ISHARES S&P/TSX 60 INDEX FUND $16.56 (Toronto symbol XIU; buy or sell through a broker; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of …read more »

ISHARES DEX UNIVERSE BOND INDEX FUND $31.08 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index. The 502 bonds in the portfolio have an average term to maturity of 9.31 years. The fund’s MER is 0.32%.

The bonds in the index are 70.6% government and 29.4% corporate.

The fund yields …read more »

ISHARES DEX SHORT TERM BOND INDEX FUND $29.29 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index.

This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 264 bonds with an average term …read more »

The Bank of Canada is holding interest rates steady, even though the current inflation rate of 3.1% is well above the bank’s 2% target. The bank doesn’t want to slow Canada’s economic growth with higher rates, or push the dollar any higher.

Still, the long-term outlook is for higher interest rates. The heavy deficit spending of the past few years and …read more »

Many investors see asset allocation funds as an easy and profitable way to diversify between stocks, bonds and cash equivalents.

What you get when you buy units of asset allocation funds

Asset allocation funds are mutual funds that can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those …read more »

ISHARES S&P/TSX 60 INDEX FUND $19.21 (Toronto symbol XIU; buy or sell through a broker; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of …read more »

ISHARES MSCI CANADA INDEX FUND $31.84 (New York symbol EWC; buy or sell through brokers; ca.ishares.com) is like a market-cap-based index fund, but its managers try to improve performance by tinkering with the index-fund formula. They do this through their Morgan Stanley Capital International Canada Index. The fund has an MER of 0.50%.

The index’s top holdings are Royal Bank, 6.0%; …read more »

Silver has fallen sharply from its all-time high of $48.70 U.S. an ounce, where it closed on April 28, 2011. Silver now trades at $36.80 U.S. an ounce. That’s up 106.2% from $17.87 U.S. an ounce a year ago.

Silver could well regain its high and move up even further over the longer term, although it will likely remain volatile. …read more »